Revision: 53. Prepared by

Transcription

1 PJM Manual 11: Energy & Ancillary Services Market Operatins Revisin: 53 Effective Date: Octber 1, 2012 Prepared by Frward Market Operatins PJM 2012 i

2 Table f Cntents Table f Cntents Table f Cntents... ii Table f Exhibits...vi Apprval... 7 Current Revisin... 7 Intrductin... 8 Abut This Manual... 8 Intended Audience... 8 References... 9 Using This Manual... 9 What Yu Will Find In This Manual... 9 Sectin 1: Overview f Energy & Ancillary Services Market Operatins PJM Respnsibilities PJM Market Participants Respnsibilities Market Buyers Market Sellers Lad Serving Entities Curtailment Service Prviders Sectin 2: Overview f the PJM Energy Markets Overview f PJM Energy Markets Definitin f Lcatinal Marginal Price Energy Market Business Rules Bidding & Operatins Time Line: Market Buyers Market Sellers Minimum Generatr Operating Parameters Parameter Limited Schedules Curtailment Service Prviders PJM Activities Mechanical/Technical Rules Mdeling Day-ahead Lcatinal Marginal Price (LMP) Calculatins Real-time Lcatinal Marginal Price (LMP) Calculatins Unit Dispatch System PJM State Estimatr Lcatinal Pricing Algrithm PJM Real-time Lcatinal Marginal Price Verificatin Prcedure Price-Bunding Vilatins Calculatin f Ramp Limited Desired MWh Using and Calculating Lcatinal Marginal Prices Day-ahead Settlement Balancing Settlement Balancing Operating Reserve Cst Analysis Maximum Emergency Generatin in Day-ahead Market PJM 2012 ii

3 Table f Cntents Minimum Capacity Emergency in Day-ahead Market Sectin 3: Overview f the PJM Regulatin Market Overview f the PJM Regulatin Market PJM Regulatin Market Business Rules Regulatin Market Eligibility Regulatin Market Data Timeline Regulatin Bilateral Transactins Regulatin Requirement Determinatin Regulatin Obligatin Fulfillment Regulatin Offer Perid Regulatin Market Clearing Hydr Units Regulatin Market Operatins Settlements Sectin 4: Overview f the PJM Synchrnized Reserve Market Overview f the PJM Synchrnized Reserve Market PJM Synchrnized Reserve Market Business Rules Synchrnized Reserve Market Eligibility Synchrnized Reserve Requirement Determinatin Synchrnized Reserve Obligatin Fulfillment Synchrnized Reserve Offer Perid Bilateral Synchrnized Reserve Transactins Synchrnized Reserve Market Clearing Hydr Units Demand Resurces Synchrnized Reserve Market Operatins Settlements Verificatin Nn-Perfrmance Sectin 5: Market Clearing Prcesses and Tls PJM Philsphy Scheduling Tls Enhanced Energy Scheduler (EES) PJM eschedules Lad Frecasting Markets Database System Hydr Calculatr PJM Energy Market Technical Sftware Ancillary Service Optimizer (ASO) Sectin 6: Reserve Requirements in PJM Energy Markets Frecasting PJM Generatin Requirement PJM Regulatin Requirement Regulatin Service PJM Synchrnized Reserve Requirements PJM 2012 iii

4 Table f Cntents Synchrnized Reserve Service Prcessing Market Infrmatin PJM Member Lad Frecasts Reserve Service Self-Scheduled Resurces Deviatins frm Day-ahead Market fr Pl Scheduled Resurces Credits fr Cancellatin f Pl Scheduled Resurces Resurce Specific Data Requirements External Market Sellers Day-ahead Market between 1200 and Rebidding Perid between 1600 and Real Time Market Sectin 7: External Transactin Scheduling Sectin 8: Psting OASIS Infrmatin Sectin 9: Hurly Scheduling Hurly Scheduling Adjustments Sectin 10: Overview f the Demand Resurce Participatin Overview f Demand Resurce Participatin Ecnmic Lad Respnse Participant Review Prcess Demand Resurce Registratin Requirements Curtailment Service Prviders PJM Activities Prcess fr Determining the Apprpriate CBL (standard r alternative) Ecnmic Energy Market Participatin Day-ahead Operatins Real-time Operatins Demand Resurce Metering and Settlement Data Requirements Metered Data Custmer Baseline Lad (CBL) Settlements Data Requirements Aggregatin fr Ecnmic Lad Respnse Calculatins fr the weighted average retail rate and line lss factr Settlement fr Aggregatin Interval Meter Equipment and Lad Data Requirements Sectin 11: Overview f the Day-ahead Scheduling Reserve Market Overview f Day-ahead Scheduling Reserve Market PJM Day-ahead Reserve Market Business Rules Day-ahead Scheduling Reserve Market Reserve Requirement Day-ahead Scheduling Reserve Market Eligibility Day-ahead Scheduling Reserve Market Rules Day-ahead Scheduling Reserve Market Offer Perid Day-ahead Scheduling Reserve Market Clearing Day-ahead Scheduling Reserve Market Operatins Day-ahead Scheduling Reserve Perfrmance PJM 2012 iv

5 Table f Cntents Day-ahead Scheduling Reserve Market Obligatin Fulfillment Day-ahead Scheduling Reserve Bilateral Transactins Day-ahead Scheduling Reserve Market Settlement Sectin 12: Overview f the Price Respnsive Demand Overview f Price Respnsive Demand Price Respnsive Demand Business Rules Price-Demand Curves in the Energy Market Characteristics f Price-Demand Curves in PJM Energy Market Business Rule Changes t Price Sensitive Demand Bids Price-Demand Curves in Real-time Energy Market Operatins Balancing Operating Reserves Deviatins PRD Curves Submitted by Curtailment Service Prviders (CSPs) Attachment A: Interchange Energy Schedule Curtailment Order Curtailment f Transmissin r Recall f Energy: Nn-Firm ver Secndary Pints nt willing t pay cngestin charges Nn-Firm nt willing t pay cngestin charges (NF-NPC) Netwrk Imprt nt willing t pay cngestin charges (Net-NPC) Spt Market Imprt (SPTIN) Nn-Firm ver Secndary Pints willing t pay cngestin charges Nn-Firm willing t pay cngestin charges (NF-WPC) Netwrk Imprt willing t pay cngestin charges (Net-WPC) Firm Example f Recall f Energy Firm Curtailment f Capacity Backed Resurces Attachment B: Pumped Strage Mdeling Descriptin f Mdel Attachment C: PJM Prcedure fr Cst Reimbursement Offers Operatins Settlements Revisin Histry PJM 2012 v

6 Table f Exhibits Table f Exhibits Exhibit 1: Scheduling Timeline Exhibit 2: Lad Frecasting Prcess Exhibit 3: Synchrnized Reserve and Regulatin Market Daily Timeline Exhibit 4: Synchrnized Reserve and Regulatin Market Hurly Timeline Exhibit 5: Settlement Subsystems Exhibit 6: Dwnlad Data frm Markets Database Exhibit 7: Energy Market Data Flw Exhibit 8: Synchrnized Reserve and Regulatin Subsystems Exhibit 9: Requirement Versus Resurce Supply Exhibit 10: Synchrnized & Regulatin Data Flw Exhibit 11: Generatr Regulatin Service Exhibit 12: Capacity and Energy Resurce Data Requirements PJM 2012 vi

7 Apprval and Current Revisin Apprval Apprval Date: 09/27/2012 Effective Date: 10/01/2012 Mike Ward, Manager Day-ahead Market Operatins Rebecca Carrll, Manager Real-time Market Operatins Current Revisin Revisin 53 (10/01/2012): Added Sectin 12: Overview f the Price Respnsive Demand. Cnfrming revisins fr FERC Order ER accepted n 12/14/2011 and effective 05/15/2012 t integrate Price Respnsive Demand (PRD) in PJM Capacity Market. PJM

8 Intrductin Intrductin Welcme t the PJM Manual fr Energy & Ancillary Services Market Operatins. In this Intrductin, yu will find the fllwing infrmatin: What yu can expect frm the PJM Manuals in general (see Abut PJM Manuals ). What yu can expect frm this PJM Manual (see Abut This Manual ). Hw t use this manual (see Using This Manual ). Abut PJM Manuals The PJM Manuals are the instructins, rules, prcedures, and guidelines established by PJM fr the peratin, planning, and accunting requirements f the PJM RTO and the PJM Energy Market. The manuals are gruped under the fllwing categries: Transmissin PJM Energy Market Generatin and transmissin intercnnectin Reserve Accunting and Billing PJM administrative services Fr a cmplete list f all PJM Manuals, g t and select Manuals under the Dcuments tab. Abut This Manual The PJM Manual fr Energy & Ancillary Services Market Operatins is ne f a series f manuals within the PJM Energy Market manuals. This manual fcuses n the day-ahead and hurly scheduling activities that are perfrmed by the PJM staff and the PJM Members. The manual describes the rules and prcedures that are fllwed t schedule resurces. The PJM Manual fr Energy & Ancillary Services Market Operatins cnsists f ten sectins. The sectins are listed in the table f cntents beginning n page ii. Intended Audience The intended audience f the PJM Manual fr Energy & Ancillary Services Market Operatins is: PJM Members - Any participants requesting t purchase r sell energy t r frm the PJM Interchange Energy Market and any participant that schedules bilateral sales r purchases. PJM

9 Intrductin PJM peratins staff - The PJM peratins staff prcesses the market infrmatin and develps the resurce schedule. PJM dispatchers - The PJM dispatchers prcess PJM Member requests, make hurly schedule adjustments, and pst infrmatin in the OASIS. Lcal Cntrl Center dispatchers - The Lcal Cntrl Center dispatchers submit hurly schedule changes. Lcal Cntrl Center peratins supprt staff - The Lcal Cntrl Center peratins supprt staff supprt the day-ahead infrmatin requirements. References The References t ther dcuments that prvide backgrund r additinal detail directly related t the PJM Manual fr Energy & Ancillary Services Market Operatins are: EES User s Guide PJM Manual fr Transmissin Operatins(M-03) PJM Manual fr PJM OASIS Operatin (M-04) PJM Manual fr PJM eschedules (M-09) PJM Manual fr Pre-Scheduling Operatins (M-10) PJM Manual fr Balancing Operatins (M-12) PJM Manual fr Operating Agreement Accunting (M-28) PJM Manual fr Definitins & Abbreviatins (M-35) Using This Manual We believe that explaining cncepts is just as imprtant as presenting prcedures. This philsphy is reflected in the way we rganize the material in this manual. We start each sectin with an verview. Then, we present details, prcedures r references t prcedures fund in ther PJM manuals. The fllwing prvides an rientatin t the manual s structure. What Yu Will Find In This Manual A table f cntents that lists tw levels f subheadings within each f the sectins An apprval page that lists the required apprvals and a brief utline f the current revisin Sectins cntaining the specific guidelines, requirements, r prcedures including PJM actins and market participant actins Attachments that include additinal supprting dcuments, frms, r tables in this PJM Manual A sectin at the end detailing all previus revisins f the PJM Manual PJM

10 Intrductin A new intrductin with the List f PJM Manuals table remved. PJM

11 Sectin 1: Overview f Energy & Ancillary Services Market Operatins Sectin 1: Overview f Energy & Ancillary Services Market Operatins Welcme t the Overview f Energy & Ancillary Services Market Operatins f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: A descriptin f the scpe and purpse f scheduling (see Scpe & Purpse f Energy & Ancillary Services Market Operatins ). A list f the PJM respnsibilities (see PJM Respnsibilities ). A list f the market participants scheduling respnsibilities (see PJM Market Participant Respnsibilities ). Scpe & Purpse f Energy & Ancillary Services Market Operatins Operatin f the PJM RTO markets invlves many activities that are perfrmed by different perating and technical persnnel. These activities ccur in parallel n a cntinuus basis, 24 hurs a day and can be gruped int three verlapping time frames: pre-scheduling peratins scheduling peratins and the Day-ahead Energy Market dispatching and the Real-time Energy Market In the PJM Manual fr Energy & Ancillary Services Market we fcus mainly n the activities that take place ne day prir t the Operating Day including the activities assciated with the Day-ahead Energy Market. Exhibit 2 presents the scheduling activities in the frm f a time line. The reference pint fr the timeline is the Operating Day, recgnizing that every new day becmes an Operating Day. This timeline-type f descriptin is used thrughut this PJM Manual. Generatin resurces, regardless f fuel type, fall int ne f tw categries, Capacity Resurces r Energy Resurces. If available, All Generatin Capacity Resurces, that have an RPM Resurce Cmmitment must submit ffer data int the Day-ahead Market and may elect either t Self-Schedule r ffer the resurce t PJM fr scheduling as a PJM RTO- Scheduled Resurce. In this sectin we fcus primarily n the PJM Day-ahead Energy Market and the Cntrl Area reliability-based scheduling prcess that takes place after the Day-ahead Energy Market is clsed. Scheduling by PJM includes the Day-ahead Energy Market, the Cntrl Area reliability-based scheduling prcess and the hurly scheduling prcess. The Day-ahead Energy Market bid/ffer perid clses at nn n the day befre the Operating Day and the Day-ahead Market results are psted at 1600 n the day befre the Operating Day. The Cntrl Area reliability-based scheduling prcess ccurs thrughut the day befre the perating day. Hurly scheduling ccurs up t sixty minutes prir t an hur during the Operating Day. During the scheduling prcess, PJM will: PJM

12 Sectin 1: Overview f Energy & Ancillary Services Market Operatins Clear the Day-ahead Market and Day-ahead Scheduling Reserve Market based using Least-cst security cnstrained resurce cmmitment and dispatch that simultaneusly ptimizes energy and reserves. Determine a plan t reliably serve the hurly energy and reserve requirements f the PJM RTO by minimizing the cst t prvide additinal perating reserves abve what was scheduled in the Day-ahead Market if required, Perfrm hurly scheduling thrughut the Operating Day as required. Event r Deadline Time Day Event r Deadline PJM receives bids/ffers fr energy AND ffers fr regulatin fr next perating day Initial Schedules OASIS Psting D Day-ahead market is clsed fr evaluatin by PJM AND Regulatin market unavailable Operating Day D PJM psts Day-ahead LMPs & hurly schedules; Rebidding perid; Regulatin market pens fr ffers COP Initialized COP Effective PJM evaluates regulatin ffers Thrughut Operating Day PJM cntinually reevaluates and sends ut individual generatin schedule updates, as required Thrughut Operating Day PJM cntinually reevaluates ffers and peridically tests perfrmance Hydr Calculatr RSC Markets Database EES 0000 PJM OI Prduced Lad Frecast D+1 D+2 D+3 D+4 D+5 D+6 Billing Exhibit 1: Scheduling Timeline PJM Members submit their bids accrding t either actual cst r ffer price as designated by the Operating Agreement f PJM Intercnnectin, L.L.C. fr each generatin resurce. PJM

13 Sectin 1: Overview f Energy & Ancillary Services Market Operatins In this manual, Lcatinal Marginal Price (LMP) is defined as the marginal price fr energy at the lcatin where the energy is delivered r received. Fr accunting purpses, LMP is expressed in dllars per megawatt-hur ($/MWh). In perfrming this LMP calculatin, the cst f serving an increment f lad at each bus frm each resurce assciated with an eligible energy ffer is calculated as the sum f the fllwing three cmpnents f Lcatinal Marginal Price: System Energy Price, Cngestin Price, and Lss Price. In this manual, unless therwise specified, the terms LMP r Lcatinal Marginal Price refer t the ttal LMP value including all three cmpnents. Fr infrmatin n the cncept f Lcatinal Marginal Prices, please refer t Sectin 2 f this manual. 1.1 PJM Respnsibilities In the Day-ahead Market, PJM determines the least-price means (minimizing prductin cst in terms f bid prices submitted) f satisfying the Demand bids, Decrement bids, perating reserves and ther ancillary services requirements f the market buyers, including the reliability requirements f the PJM RTO. In additin t the Day-ahead Market scheduling prcess, PJM will als schedules resurces t: Satisfy the reserve requirements f the PJM RTO by minimizing the cst t prvide additinal perating reserves abve what was scheduled in the Day-ahead Market if required, Prvide ther ancillary services requirements f the market buyers, Satisfy all ther reliability requirements f the PJM RTO. Specifically, PJM s respnsibilities t supprt scheduling activities fr all PJM Members include: Develp the Day-ahead Market financial schedules based upn participant-supplied bids, ffers and bilateral transactin schedules using least-cst security cnstrained resurce cmmitment and dispatch analysis. Pst the fllwing infrmatin after the Day-ahead Market clears at 4:00 p.m.: Schedules fr Next Day by participant (generatin & demand), Transactin Schedules, Day-ahead LMPs, Day-ahead Cngestin Prices, & Day-ahead Lss Prices Day-ahead Binding Transmissin Cnstraints, Day-ahead Net Tie Schedules, Day-ahead Reactive 500 kv Interface Indicatr Limits, PJM Lad Frecast, Aggregate Demand Bids PJM Day-ahead Scheduling Reserve (Operating Reserve) Objective. PJM

14 Sectin 1: Overview f Energy & Ancillary Services Market Operatins Perfrm scheduling fr the PJM Frecasted lad and reserves nt cvered by the Dayahead demand bids, Self-Scheduled Resurces r Bilateral Transactins, including scheduling generatin t relieve expected transmissin cnstraints Perfrm analysis t clear the Regulatin Market and Synchrnized Reserve Markets simultaneusly and pst the Regulatin Marginal Clearing Price (RMCP), Regulatin Market Capability Clearing Price (RMCCP), Regulatin Market Perfrmance Clearing Price (RMPCP) and Synchrnized Reserve Marginal Clearing Price (SRMCP) n an hurly basis n later than 30 minutes prir t the start f the perating hur. Maintain data and infrmatin which is related t generatin facilities in the PJM RTO, as may be necessary t cnduct the scheduling and dispatch f the PJM Interchange Energy Market and PJM RTO Pst the updated frecast f PJM Lad and f the lcatin and duratin f any expected transmissin cngestin between areas in the PJM RTO Revise schedule f resurces t reflect updated prjectins f lad, changing Bulk Electric System cnditins, availability f and cnstraints f limited energy and ther resurces 1.2 PJM Market Participants Respnsibilities Only PJM Members are eligible t submit ffers and purchase energy r related services in the Day-ahead Energy Market and in the Real-time Energy Market. PJM Members include Market Buyers and Market Sellers Market Buyers There are tw general types f Market Buyers: Metered Market Buyer A Metered Market Buyer is a buyer that is purchasing energy frm the PJM Interchange Energy Market fr cnsumptin by end-users inside the PJM RTO. A Metered Market Buyer may be further classified as a Generatin Market Buyer. A Generatin Market Buyer is a Metered Market Buyer that wns r has cntractual rights t the utput f generatin resurces that are capable f serving the Market Buyer s lad in the PJM RTO r selling energy-related services in the PJM Interchange Energy Market r elsewhere. By definitin, all Market Buyers becme Market Sellers upn apprval f their applicatins. The scheduling respnsibilities f a Metered Market Buyer are t: Submit frecasts f custmer lads fr the next Operating Day Submit ecnmic lad management agreements t PJM Submit hurly schedules fr Self-Scheduled Resurce increments Submit a frecast f the availability f each Generatin Capacity Resurce fr the next seven days PJM

15 Sectin 1: Overview f Energy & Ancillary Services Market Operatins Submit Offer Data fr Generatin Capacity Resurces fr supply f energy t the PJM Day-ahead Energy Market fr the next day whether Self-Scheduled r PJM scheduled Submit Bilateral Transactins fr delivery within the PJM RTO, regardless f whether the generatin is lcated inside r utside the PJM RTO Submit ptinal Offer Data t supply Regulatin Services in the PJM Regulatin Market. Submit ptinal Offer Data t supply Synchrnized Reserve Services in the Synchrnized Reserve Market. Unmetered Market Buyer An Unmetered Market Buyer is a Market Buyer that is making purchases f energy frm the PJM Interchange Energy Market fr cnsumptin by metered end-users r end-users that are lcated utside the PJM RTO. The scheduling respnsibilities f an Unmetered Market Buyer are t: a. Submit ptinal requests t purchase specified amunts f energy fr each hur f the Operating Day during which it intends t purchase frm the PJM Day-ahead Energy Market, alng with Dispatch Rates (i.e. price-sensitive Demand Bids) abve which it des nt desire t purchase, if desired b. Purchase transmissin capacity reservatin in rder t receive generatin frm PJM Interchange Energy Market if the energy is being delivered t endusers that are lcated utside the PJM RTO Market Sellers A Market Seller is a PJM Member that demnstrates t PJM that it meets the standards fr the issuance f an rder mandating the prvisin f transmissin service under Sectin 211 f the Federal Pwer Act, submits an applicatin t the PJM, and is apprved by the Market Administrative Cmmittee (see the PJM Manual fr Administrative Services fr Operating Agreement f PJM Intercnnectin, L.L.C. (M-33)). The scheduling respnsibilities f a market seller include: submit schedules fr bilateral sales t entities utside the PJM RTO frm within the PJM RTO submit ptinal ffers fr the supply f energy, capacity, and ther services frm Energy Resurces int the Day-ahead Energy Market r the Real-time Energy Market fr the next perating day nly Lad Serving Entities PJM

16 Sectin 1: Overview f Energy & Ancillary Services Market Operatins A Lad Serving Entity (LSE) is any entity that has been granted authrity r has an bligatin pursuant t state r lcal law, regulatin, r franchise t sell electric energy t end-users that are lcated within the PJM RTO. An LSE may be a Market Buyer r a Market Seller, as described abve Curtailment Service Prviders A Curtailment Service Prvider is a Member r Special Member, which acting n behalf f itself r ne r mre ther Members r nn-members, participates in the PJM Interchange Energy Market by causing a reductin in demand. PJM

17 Sectin 2: Overview f the PJM Energy Markets Sectin 2: Overview f the PJM Energy Markets Welcme t the Overview f the PJM Energy Markets sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the PJM Energy Markets (see Overview f PJM Energy Markets ). A list f the PJM Tw-Settlement Market Business Rules (see PJM Energy Markets Business Rules ). 2.1 Overview f PJM Energy Markets The PJM Energy Markets cnsists f tw markets, a Day-ahead market and a Real-time balancing market. The Day-ahead Market is a frward market in which hurly clearing prices are calculated fr each hur f the next perating day based n generatin ffers, demand bids, Increment ffers, Decrement bids and bilateral transactin schedules submitted int the Day-ahead Market. The balancing market is the real-time energy market in which the clearing prices are calculated every five minutes based n the actual system peratins security-cnstrained ecnmic dispatch. Separate accunting settlements are perfrmed fr each market, the Day-ahead Market settlement is based n scheduled hurly quantities and n day-ahead hurly prices, the balancing settlement is based n actual hurly (integrated) quantity deviatins frm day-ahead scheduled quantities and n real-time prices integrated ver the hur. The day-ahead price calculatins and the balancing (real-time) price calculatins are based n the cncept f Lcatinal Marginal Pricing. The Day-ahead Market enables participants t purchase and sell energy at binding Dayahead Lcatinal Marginal Prices (LMPs). The cmpnents f Day-ahead hurly LMPs are the Day-ahead System Energy Price, Day-ahead Cngestin Price, and the Day-ahead Lss Price. It als allws transmissin custmers t schedule bilateral transactins at binding Day-ahead cngestin charges based n the differences in the Cngestin Prices between the transactin surce and sink. Lad Serving Entities (LSEs) may submit hurly demand schedules, including any price sensitive demand, fr the amunt f demand that they wish t lck-in at Day-ahead prices. Any generatr that is a PJM generatin capacity resurce that has an RPM Resurce Cmmitment must submit a bid schedule int the Dayahead Market even if it is self-scheduled r unavailable due t utage. Other generatrs have the ptin t bid int the Day-ahead Market. Transmissin custmers may submit fixed, dispatchable r up t cngestin bid bilateral transactin schedules int the Dayahead Market and may specify whether they are willing t pay cngestin charges r wish t be curtailed if cngestin ccurs in the Real-time Market. Curtailment Service Prviders (CSPs) may submit demand reductin bids. All spt purchases and sales in the Day-ahead Market are settled at the Day-ahead prices. Cngestin that results frm the Day-ahead sales and purchases f energy is settled at the Day-ahead Cngestin Price cmpnent f PJM

18 Sectin 2: Overview f the PJM Energy Markets LMP. Transmissin lsses that result frm the Day-ahead sales and purchases f energy are settled at the Day-ahead Lss Price cmpnent f LMP. After the daily qute perid clses, PJM will calculate the Day-ahead schedule based n the bids, ffers and schedules submitted, using the scheduling prgrams described in Sectin 2 f this manual, based n least-cst, security cnstrained resurce cmmitment and dispatch fr each hur f the next perating day. The Day-ahead scheduling prcess will incrprate PJM reliability requirements and reserve bligatins int the analysis. The resulting Day-ahead hurly schedules and Day-ahead LMPs represent binding financial cmmitments t the market participants. Financial Transmissin Rights (FTRs) are accunted fr at the Day-ahead Cngestin Price cmpnent f LMP values (see the PJM Manual fr Financial Transmissin Rights (M-06)). The Real-time Energy Market is based n actual real-time peratins. Generatrs that are PJM capacity resurces and Demand Resurces that are available but nt selected in the day-ahead scheduling may alter their bids fr use in the Real-time Energy Market during the Generatin Rebidding Perid frm 4:00 PM t 6:00 PM (therwise the riginal bids remain in effect fr the balancing market). Real-time LMPs are calculated based n actual system perating cnditins as described by the PJM state estimatr. LSEs will pay the Real-time LMPs fr any demand that exceeds their Day-ahead scheduled quantities (and will receive revenue fr demand deviatins belw their scheduled quantities). In the energy market, generatrs are paid the Real-time LMPs fr any generatin that exceeds their day-ahead scheduled quantities (and will pay fr generatin deviatins belw their scheduled quantities). Transmissin custmers pay cngestin charges based n the real-time Cngestin Price cmpnent f LMPs fr bilateral transactin quantity deviatins frm Dayahead schedules. CSPs may self schedule demand reductins fr Demand Resurces nt dispatched in real-time by PJM. All spt purchases and sales in the balancing market are settled at the real-time LMPs. Cngestin that results frm the Real-time sales and purchased f energy is settled at the Real-time Cngestin Price cmpnent f LMP. Transmissin lsses that result frm the Real-time sales and purchased f energy are settled at the Real-time Lss Price cmpnent f LMP. 2.2 Definitin f Lcatinal Marginal Price Lcatinal Marginal Price (LMP) is defined as the marginal price fr energy at the lcatin where the energy is delivered r received. Fr accunting purpses, LMP is expressed in dllars per megawatt-hur ($/MWh). LMP is a pricing apprach that addresses Transmissin System cngestin and lss csts, as well as energy csts. Therefre, each spt market energy custmer pays an energy price that includes the full marginal cst f delivering an increment f energy t the purchaser s lcatin. When there is transmissin cngestin in PJM, the PJM dispatcher dispatches ne r mre f the generating units ut f ecnmic merit rder t keep transmissin flws within limits. There may be many resurces that are dispatched t relieve the PJM

19 Sectin 2: Overview f the PJM Energy Markets cngestin. The LMP reflects the cst f redispatch fr ut-f-merit resurces and cst f delivering energy t that lcatin. LMPs are calculated at all injectins, withdrawals, EHVs (nminal vltage f 500 KV and abve), Interfaces, and varius aggregatins f these pints. LMPS are calculated in bth the Real-time Energy Market and Day-ahead Energy Market. The LMP calculatin calculates the full marginal cst f serving an increment f lad at each bus frm each resurce assciated with an eligible energy ffer as the sum f three separate cmpnents f LMP. In perfrming this LMP calculatin, the cst f serving an increment f lad at each bus frm each resurce assciated with an eligible energy ffer is calculated as the sum f the fllwing three cmpnents f Lcatinal Marginal Price: System Energy Price - is the price at which the Market Seller has ffered t supply an additinal increment f energy frm a generatin resurce r decrease an increment f energy being cnsumed by a Demand Resurce. Cngestin Price - is the effect n transmissin cngestin csts (whether psitive r negative) assciated with increasing the utput f a generatin resurce r decreasing the cnsumptin by a Demand Resurce, based n the effect f increased generatin frm r cnsumptin by the resurce n transmissin line ladings. Lss Price - is the effect n transmissin lss csts (whether psitive r negative) assciated with increasing the utput f a generatin resurce r decreasing the cnsumptin by a Demand Resurce, based n the effect f increased generatin frm r cnsumptin by the resurce n transmissin lsses. The energy ffer r ffers that can serve an increment f lad at a bus at the lwest cst, calculated in this manner, shall determine the Lcatinal Marginal Price at that bus. 2.3 Energy Market Business Rules Bidding & Operatins Time Line: The day-ahead scheduling/bidding timeline fr PJM energy markets cnsists f the fllwing time frames: 1200 Day-ahead Market bid perid clses. All bids must be submitted t PJM. At 1200 PJM begins t run the day-ahead market clearing sftware t determine the hurly cmmitment schedules and the LMPs fr the Day-ahead Market. This is the first resurce cmmitment run, which determines the resurce cmmitment prfile that satisfies the fixed demand, cleared price-sensitive demand bids, cleared demand reductin bids, and PJM Day-ahead Scheduling Reserve (Operating Reserve) bjectives, while minimizing the ttal prductin cst (subject t certain limitatins) fr energy and reserves. This cmmitment analysis als includes PJM

20 Sectin 2: Overview f the PJM Energy Markets external bilateral transactin schedules and external resurce ffers int the PJM Day-ahead Market PJM psts the day-ahead hurly schedules and LMPs in the emkt System, based n the first resurce cmmitment. PJM als makes these results available in dwnladable files, via the emkt System, r a dedicated cmmunicatin link PJM pens the balancing market ffer perid. During this time, market participants can submit revised ffers fr resurces nt selected in the first cmmitment. Hwever if the market participant self-scheduled their unit in the Dayahead Market, they cannt change the unit status t ecnmic in the rebid perid The balancing market ffer perid clses. PJM perfrms a secnd resurce cmmitment, which includes the updated ffers, updated resurce availability infrmatin, and updated PJM lad frecast infrmatin and lad frecast deviatin. The fcus f this cmmitment is reliability and the bjective is t minimize start-up and n lad csts fr any additinal resurces that are cmmitted Operating Day PJM may perfrm additinal resurce cmmitment runs, as necessary, based n updated PJM lad frecasts and updated resurce availability infrmatin. PJM sends ut individual generatin schedules updates t specific generatin wners nly, as required Market Buyers The fllwing business rules apply t Market Buyers: Each Market Participant's prfile (which is defined by PJM) shall specify the transmissin znes r buses fr which that participant is eligible t submit demand bids. Market Buyers may submit hurly demand quantities fr which it cmmits t purchase energy at day-ahead prices fr cnsumptin in the next Operating Day. Quantity bids must specify MW quantity and lcatin (transmissin zne, aggregate, r single bus). Demand bids are assumed t exclude lsses (transmissin zne lsses and share f 500 kv lsses). Price sensitive demand bids shall specify MW quantity, lcatin (transmissin zne, aggregate, r single bus), and the price at which the demand shall be curtailed. Price sensitive demand bids are accepted in single bid blcks nly. Up t nine bid blcks may be submitted per market participant at a specific lcatin. If a Market Buyer submits n day-ahead bid infrmatin, then a zer MW quantity is assumed. Fr the Day-ahead Market, the Electric Distributin Cmpany (EDC) shall specify the transmissin zne, bus distributins, and aggregate bus distributins as a daily distributin. The default distributin fr a transmissin zne fr the Day-ahead Market is the state estimatr distributin fr that zne at 8:00 a.m. ne week prir t PJM

21 Sectin 2: Overview f the PJM Energy Markets the Operating Day (i.e. if next Operating Day is Mnday, the default distributin is frm 8:00 a.m. n Mnday f the previus week). The EDC may update the default distributin factrs nly after the state estimatr ppulates the default. EDCs shall submit a frecast f demand within their transmissin zne. This is fr reliability purpses nly (and des nt, therefre, require a binding bid). A Market Buyer that is nt an LSE r purchasing n behalf f an LSE is nt required t purchase transmissin service fr purchases frm the PJM Market t cver deviatin frm its sales in a day-ahead market. The list f transmissin znes, aggregates, and single buses at which demand bids are accepted is defined by PJM. Market Buyers may submit increment ffers r decrement bids at any hub, transmissin zne, aggregate, single bus r eligible external interface pint (psted n the PJM Web site) fr which an LMP is calculated. It is nt required that physical generatin r lad exists at the lcatin that is specified in the increment ffer r decrement bid. Price-sensitive demand bids, increment ffers, and decrement bids must be cnsistent with the $1000/MWh price cap Market Sellers The fllwing business rules apply t Market Sellers: Self-scheduled generatin shall submit an hurly MW schedule. Generatrs that are Capacity Resurces shall submit ffers int the Day-ahead Market, even if they are unavailable due t frced, planned, r maintenance utages. Generatrs that are Capacity Resurces and are self-scheduling shall submit ffer data in the event that they are called upn during emergency prcedures. Generatin Capacity Resurces shall submit a schedule f availability fr the next seven days and may submit nn-binding ffer prices fr the days beynd the next Operating Day. The set f ffer data last submitted fr each Generatin Capacity Resurce shall remain in effect fr each day until specifically superseded by subsequent ffers. If a Generatin Capacity Resurce is nt scheduled in the Day-ahead Market, it may revise its ffer and submit int the real-time market r it may self-schedule the resurce. Generatin wners planning t run generatin resurces scheduled in the Dayahead Markets are required t call the PJM Cntrl Center at least 20 minutes prir t bringing the unit nline. Generatin wners f self-scheduled generatin resurces must als prvide at least 20 minutes ntice. Generatin resurces that are scheduled in the Day-ahead Market have a financial bligatin t sell their utput in real-time. Prvisins exist in the Tariff that permit PJM

22 Sectin 2: Overview f the PJM Energy Markets make whle payments t be made t thse cmbustin turbines that are scheduled in the Day-ahead Market and then nt called n in real-time by PJM that are furthered defined in PJM Manual M-28. Generatin Capacity Resurces that have ntificatin, startup, and minimum run times that exceed 24 hurs must submit binding ffer prices fr the next seven days. Each Generatin Capacity Resurce must make available at least ne cst-based schedule and if it falls within the types f generatrs in the PJM Unit Parameter matrix it must als submit a Price Based Parameter Limited Schedule. Generatin ffers may cnsist f startup, n-lad, and incremental energy ffer. A generatin ffer may nt exceed $1000/MWh. Energy resurces may ffer int the Day-ahead Market r Real-time Market. If an Energy resurce des nt submit ffer data, then the ffer is assumed t be a zer MW quantity. Intermittent Generatin Resurces, that are Capacity Resurces, shall meet the must ffer requirement by either self-scheduling (Availability = Must Run) r may allw the Day-ahead Market t schedule by ffering the unit as an dispatchable resurce (Availability = Ecnmic). The hurly Day-ahead self-scheduled values fr intermittent resurces may vary hur t hur frm the capacity bligatin value, Tw single price-based schedules may be ffered int the Day-ahead Market. One schedule must be a price based parameter limited schedule. The price-based parameter-limited schedule may be unavailable, and if it is, the use max gen flag must be set t yes. The price-based parameter limited schedule will be cmmitted during Maximum Generatin Emergency if it is unavailable in the Day Ahead Market and the use max gen flag is set t yes. The secnd price schedule is a pricebased schedule that is nt parameter limited. One f these tw price schedules must be available in the Day Ahead Market. In additin t the price-based schedule, ne cst-based schedule shall be made available fr PJM's use in the event that the resurce is used t cntrl a transmissin cnstraint. The cst based schedule shall be parameter-limited. A generatr ffer that is accepted fr the Day-ahead Market autmatically carries ver int the balancing market. Only a single price-based ffer may be submitted int the balancing market. A generatr ffer fr a generating unit with cmbined cycle capability shall make available either the schedule fr the CTs r the schedule fr the cmbined cycle unit, nt bth. Only CTs may submit weather curves, which specify MW limits fr CTs as a functin f temperature. Frecast pints shall cnsist f a daytime temperature and a nighttime temperature. There are separate weather curves fr ecnmic MW and fr emergency MW. PJM

23 Sectin 2: Overview f the PJM Energy Markets Each CT is assigned t a weather pint, which is entered by the Operating Cmpany. As generating units change wnership it may be necessary t add weather pints. The default fr the weather pints is the PJM temperature frecast. The pririty f generatr ffer perating limits are as fllws: (1) Unit Hurly MW limits (emkt Unit Hurly Updates), (2) Daily Unit Schedule Limits (emkt Schedule Detail), (3) Unit limits (emkt Unit Detail). Daily unit schedule MW limits can be verridden by unit hurly MW limits. Weather curves fr CTs apply t bth unit limits and schedule limits. Market Sellers may submit increment ffers r decrement bids at any hub, transmissin zne, aggregate, single bus r eligible external interface pint (psted n the PJM Web site) fr which an LMP is calculated. It is nt required that physical generatin r lad exists at the lcatin that is specified in the increment ffer r decrement bid. A price-based unit has the ptin t chse cst-based start-up and n-lad fees. A price-based unit that chses the cst based ptin may change the start-up and nlad fees daily. A priced-based unit that chses the price based ptin will cntinue t be able t change the start-up and n-lad fees twice a year. The chice between using cst-based and price-based startup and n-lad fees can be made twice a year during the same pen enrllment windw (n r befre 1200 hurs March 31 fr the perid April 1 thrugh September 30 and n r befre 1200 hurs September 30 fr the perid Octber 1 thrugh March 31). Perid 1 is defined as the perid f time beginning April 1 and ending September 30. Perid 2 is defined as the perid f time beginning Octber 1 and ending March 31. If a priced based unit chses the cst-based start-up and n-lad fees ptin, the decisin cannt be changed until the next pen enrllment perid takes place. When a unit r part f a unit is designated as Maximum Emergency (ME), this means that the referenced utput levels may require extrardinary prcedures and that the designated MW is available t PJM nly when PJM requests Maximum Emergency Generatin. Designatin f a unit r a prtin f a unit as ME shuld be based n the real perating characteristics f the unit and nt be used t withhld all r a prtin f the capacity f a unit frm the Day-ahead Market. Designatin f all r part f a unit s capacity as Maximum Emergency (ME) cnstitutes withhlding in the Day-ahead Market, if: The capacity is nt designated as ME in the bid fr the Real-time Market, r; There is n physical reasn t designate the unit as ME. The cnsequence f withhlding a unit s capacity under ME is: The unit will be given an utage ticket which reflects a de-rating equal t the psitive difference in capacity designated Maximum Emergency in the bid fr the Day-ahead Market and capacity designated Maximum Emergency in the bid fr the Real-time Market. A unit bid includes an Ecnmic Maximum pint, which is the highest utput n its bid curve that the unit is ffering fr ecnmic dispatch. The Ecnmic Max represents the highest unrestricted level f MW that the perating cmpany will PJM

24 Sectin 2: Overview f the PJM Energy Markets perate the unit, under its ffer, fr ecnmic dispatch. The Ecnmic Max pint shuld be based n the actual capability f the unit t perate n its bid curve and shuld nt be used t withhld a prtin f the capacity f a unit frm the Day-ahead Market. Reductin f Ecnmic Max MW cnstitutes withhlding in the Day-ahead Energy Market, if: The Ecnmic Max MW is higher in the bid fr the Real-time Energy Market than in the bid fr the Day-ahead Market, r; There is n physical reasn t designate a lwer Ecnmic Max in the bid fr the Day-ahead Market bid than in the bid fr the Real-time Market. The cnsequence f withhlding a unit s capacity by reductin f Ecnmic Max MW is: The unit will be given an utage ticket which reflects a derating equal t the psitive difference in Ecnmic Max utput designated in the bid fr the Realtime Market and in the bid fr the Day-ahead Market. Generating units that are cnnected t the system at the same electrical lcatin may be aggregated and ffered int the PJM market as a single unit. The aggregated unit must be ffered int the PJM markets as a single unit with nly ne set f ffer data, including startup, n lad and incremental energy. This rule applies t all energy and ancillary service markets int which the unit is ffered. Hurly integrated, revenue quality meter data must be submitted t emeter n the basis f the aggregated unit. Real-time meter data is required fr each physical unit in rder t supprt the PJM state estimatr mdel and t allw energy settlement n an individual unit level. Balancing Operating Reserve deviatins fr aggregated units will be calculated based n the hurly aggregated unit utput as defined in PJM Manual 28: Operating Agreement Accunting, Sectin Operating Reserve Accunting. Balancing Operating Reserve Generatr deviatins fr units deemed t be nt fllwing dispatch that ccur at a single bus will be able t ffset ne anther. A single bus will be any unit lcated at the same site and that has the identical electrical impacts n the transmissin system. Units are deemed t have identical electrical impacts n the transmissin system if they meet the fllwing criteria: Units that have identical dfax t the system Units that are n the same lw side f the bus (i.e. cnnected at same vltage level) In the case f units n busses with bus-tie breaker, if bus-tie breaker was pen less than 5% f the hurs in the previus 3 years, supplier netting f units will be allwed acrss this bus-tie breaker. PJM will maintain a list f units that are deemed t have identical electrical impacts n the transmissin system t be used fr Balancing Operating Settlement. PJM will review the list n an annual basis. Generatrs will be reviewed as needed during any PJM

25 Sectin 2: Overview f the PJM Energy Markets new generatin activatin r recnfiguratin prcess as defined in Sectin 7 f PJM Manual 14d: Generatr Operatinal Requirements. Unit parameters d nt have t be identical fr the units deviatin MW t ffset ne anther. If multiple units are deemed nt fllwing dispatch at a single bus, the deviatin MW and directin f each unit at that bus will be summed t determine the deviatin MW at that bus. Units at a single bus must be wned r marketed by single PJM Market Participant. Unit mdeling changes in the PJM emkt system (unit type, aggregatin level, fr example), nt including changes based n physical changes at the plant, can be made at the beginning f each quarter. CT s are permitted t prvide an Ecnmic Minimum less than the physical ecnmic minimum value f the unit. Per the PJM Manual fr Operating Agreement Accunting, fr settlement purpses, PJM determines the resurce s hurly UDS LMP Desired MWh based n its dispatch rate, ffer data, and minimum and maximum energy limits fr that hur. Fr steam units, the lesser f the dayahead scheduled and real-time ecnmic minimum limits, and the greater f the dayahead scheduled and real-time ecnmic maximum limits, are used. Fr CT s, perating at PJM directin, the actual real-time utput is used as the UDS LMP Desired MWh value Minimum Generatr Operating Parameters Parameter Limited Schedules Belw is the list f business rules t require units t submit schedules that meet minimum accepted parameters. Pre-determined limits n nn-price ffer parameters fr all generatin resurces will define limits n generatin resurces nn-price ffer parameters under the fllwing circumstances: If the three pivtal supplier test fr the perating reserve market defined by transmissin cnstraint(s) is failed, generatin resurces will be cmmitted n their Parameter-Limited Schedule, as defined belw. The Parameter-Limited Schedule that is utilized shall be the less limiting f the defined Parameter-Limited Schedules r the submitted ffer parameters. In the event that the Office f the Intercnnectin: (i) declares a Maximum Generatin Emergency; (ii) issues an alert that a Maximum Generatin Emergency may be declared ( Maximum Generatin Emergency Alert ); r (iii) schedules units based n the anticipatin f a Maximum Generatin Emergency r a Maximum Generatin Emergency Alert fr all r any part f such Operating Day, generatin resurces will be cmmitted n their Parameter-Limited Schedule. PJM

26 Sectin 2: Overview f the PJM Energy Markets On an annual basis, PJM will define a list f minimum acceptable perating parameters, based n an analysis f histrically submitted ffers, fr each unit class fr the fllwing parameters 1 : Turn Dwn Rati Minimum Dwn Time Minimum Run Time Maximum Daily Starts Maximum Weekly Starts The fllwing parameters 2 will be reviewed n an nging basis, via a stakehlder prcess, and may, at sme future date, define limitatins fr: Ht Start Ntificatin Time Warm Start Ntificatin Time Cld Start Ntificatin Time The perating parameters fr each unit class must meet the histrically based criteria listed in the rules belw. The perating parameter limits will remain in place unless an exceptin is filed and apprved (see rules belw). Turn Dwn Rati is defined as the rati f ecnmic maximum MW t ecnmic minimum MW. The minimum acceptable Turn Dwn Rati applicable t an individual unit will be the greater f: a) The difference between the minimum f the ecnmic minima and the maximum f the ecnmic maxima submitted ver the prir 24 mnths, r b) 90 percent f the PJM-defined unit class Turn Dwn Rati. If the resulting unit Turn Dwn Rati is less than 90 percent f the PJM-defined unit class Turn Dwn Rati, then the unit s Turn Dwn Rati will be set equal t 90 percent f PJM-defined unit class Turn Dwn Rati. Fr CTs, the Turn Dwn Rati will assumed t be 1.0. The submitted Minimum Run Time may nt exceed the defined Minimum Run Time fr the PJM-defined unit class. The initial Minimum Dwn Time fr each unit is based n the minimum f the Minimum Dwn Times submitted ver the prir 24 mnths, if the resultant minimum 1 As defined in the PJM Manuals and Markets Database Dictinary. 2 As defined in the PJM Manuals and Markets Database Dictinary. PJM

27 Sectin 2: Overview f the PJM Energy Markets dwn time is less than r equal t 110 percent f the PJM-defined unit class Minimum Dwn Time. If Minimum Dwn Time submitted fr a unit is mre than 110 percent f the PJMdefined unit class Minimum Dwn Time, then the unit s Minimum Dwn Time will be set equal t 110 percent f the PJM-defined unit class Minimum Dwn Time. The initial Maximum Starts per Week fr a unit will be based n the psted level fr the PJM-defined unit class. If the Maximum Starts Per Week submitted fr a unit is less than the PJM-defined unit class maximum starts per week, then the unit s Maximum Starts per Week will be set equal t the PJM-defined unit class psted Maximum Starts per Week. The Maximum Starts Per day will be based n the PJM-defined unit class fr nn-ct units. Fr CT units, the minimum value f maximum starts per day will be 2. If the number f Maximum Daily Starts submitted by a unit is less than the PJMdefined unit class Starts per Day fr a nn-ct unit, r less than 2 fr a CT, then the unit s Maximum Starts per Day will be set equal t the PJM-defined unit class Maximum Starts per Day fr a nn-ct unit and 2 fr a CT. Generatin resurces will be required t submit an additinal price schedule specifying the unit s predefined nn-price parameter limits. This schedule will be identified as the unit s parameter limited schedule. The unit s cst-based schedule(s) t be used when the unit is ffer-capped fr transmissin will als need t include the same parameters as the Parameter-Limited Schedule. The Market Mnitring Unit shall review the Parameter Limited Schedule Matrix, included in Sectin 6.6(c) f Schedule 1 f the Operating Agreement, twice yearly, and, in the event it determines that revisin is apprpriate, shall prvide a revised matrix t the Office f the Intercnnectin by n later than December 31 and June 30, respectively, prir t the bi-annual enrllment perids fr the submissin f start-up and n-lad csts. Perid 1 is defined as the perid f time beginning April 1 and ending September 30. Perid 2 will be defined as the perid f time beginning Octber 1 and ending March 31. Pursuant t sectin II.B f Attachment M Appendix f the Tariff, exceptin requests fr Perid 1 must be received by the Market Mnitring Unit by n later than February 28, and exceptin requests fr Perid 2 must be received by the Market Mnitring Unit by n later than August 31 prir t each perid, all generatin suppliers that wish t submit a Parameter-Limited Schedule fr units with physical peratinal limitatins that prevent the units frm meeting the minimum parameters may submit a request fr a new exceptin via emkt fr evaluatin. Each generatin supplier must supply the required histrical unit perating data in supprt f the exceptin and if the exceptin requested is based n new physical peratinal limits fr the resurce fr which histrical perating data is unavailable, the generatin resurce may als submit technical infrmatin abut the physical peratinal limits fr perid exceptins f the resurce t supprt the requested parameters. Physical peratinal limitatins fr perid exceptins may include but are nt limited t, metallurgical restrictins due t age and lng term degradatin; physical design mdificatins; perating permit limitatins; perating limits impsed by federal, state PJM

28 Sectin 2: Overview f the PJM Energy Markets r lcal regulatry requirements r insurance carrier requirements; cnsent decrees; manufacturer technical bulletins; r envirnmental permit limitatins under nnemergency cnditins. Each generatin supplier requesting an exceptin based n new physical peratinal limitatins fr a unit may submit the technical infrmatin, required due t the unavailability f histrical perating data, supprting the requested parameters, which must be based n the definitin f physical peratinal limitatins fr perid exceptins f the unit. PJM and the MMU will review the peratins f the unit after each f the first three full years f peratin t verify the requested parameters. The exceptin will nt be accepted thereafter if nt supprted by the perating data. Each requested exceptin will indicate the expected duratin f the requested exceptin including the date n which the requested exceptin perid will end. If physical cnditins at the unit change such that the exceptin is n lnger required, the generatin supplier is bligated t infrm PJM and the exceptin will be reviewed t determine if the exceptin cntinues t be apprpriate. PJM and the MMU review the exceptin and prvide the generatin supplier with a decisin within ten (10) business days. Shuld PJM require additinal technical expertise in rder t evaluate the exceptin request, PJM will engage the services f a cnsultant with the required expertise. All Parameter-Limited Schedules must be submitted in emkt seven days prir t the beginning f perid 1 and perid 2, defined as April 1 and Octber 1, respectively. On a daily basis, each generatin supplier may submit ntificatin t PJM that changed physical peratinal limitatins at the unit require a temprary exceptin t the unit s parameters. Each generatin supplier must supply the required unit perating data in supprt f the exceptin. The prcess and timeline fr submitting a daily exceptin is as fllws: By 10 a.m. prir t the clse f DAM Initial Deadline t request a parameter exceptin that will begin the next perating day PLS Schedules (bth Price & Cst) will be revised in emkt t change the parameter limit fr the next perating day Daily Exceptin Requests shuld be submitted via emkt By 4 p.m. prir t perating day (clse f the DAM) PJM must receive a cmplete exceptin request that includes: Unit Name Parameter Limit Requested Reasn fr Daily Exceptin Request edart ticket Justificatin fr Daily Exceptin Request, including required unit perating data in supprt f the exceptin PJM

29 Sectin 2: Overview f the PJM Energy Markets Date n which the exceptin perid will end. Exceptins granted may nt cntinue past the beginning f the next perid. If PJM des nt receive a cmplete exceptin request, and the unit did nt clear in the DAM, the unit schedule will returned t its previus parameter limits. Physical peratinal limitatins fr daily exceptins may include, but are nt limited t, shrt term equipment failures, shrt term fuel quality prblems such as excessive misture in cal fired units, r envirnmental permit limitatins under nn-emergency cnditins. In additin, physical peratinal limitatins fr daily exceptins may include any physical peratinal limitatin fr perid exceptins that arises during the six mnth perid t which perid exceptins apply. Fr steam units, regardless f fuel type, the average histrical values fr any f the parameters as ffered by the wners fr the calendar year 2006 may be used in place f the values in the matrix. Fr steam units, regardless f fuel type, the histrical average is calculated frm the market based ffers fr market based units and frm cst-based ffers fr units that made nly cst-based ffers. Fr cmbined cycle units: If the 2006 average histrical market-based ffer parameters are within the limits in the parameter matrix, the unit will be limited t that 2006 histrical average. If nt then ii) applies; If the unit was ffered with market-based ffer parameters fr 10% r mre f the days (36 days minimum) at a level at r mre flexible than parameters in matrix, the unit will be limited at that level. If nt the iii) applies If the 2006 average histrical market based ffer parameters exceed the limits in the matrix (less flexible than the parameters in the matrix) then the unit will be limited t the level at which the market-based parameter was bid t the mst flexible level fr 10% r mre f the days (36 days minimum) at that level. Each generatin supplier will prvide a date n which the exceptin perid will end. Exceptins granted pursuant t Business Rule #27 may nt cntinue past the beginning f the next perid. Such exceptins will be accepted, but will be subject t after-the-fact review by PJM, and the MMU prvided that the after-the-fact review shall be limited t the cntinuatin f the exceptin. If physical cnditins at the unit change such that the exceptin is n lnger required, the generatin supplier is bligated t infrm PJM and the exceptin will be terminated. If an exceptin request is denied by PJM in part r in full, the generatin supplier may chse t dispute the decisin via the Dispute Reslutin Prcess as defined in the PJM Operating Agreement. While under dispute, the generatin supplier will be required t submit parameter-limited schedules fr the perid as determined during the exceptin prcess. Generatin suppliers may indicate t PJM thse units with the ability t perate n multiple fuels. Multiple-fuel units may submit a parameter-limited schedule assciated with each fuel type. All Parameter-Limited Schedules must be submitted via emkt seven days prir t the beginning f each perid. The generatin supplier PJM

30 Sectin 2: Overview f the PJM Energy Markets will be required t indicate t PJM which f the parameter-limited schedules are available each day by using the emkt use max gen flag. Any exceptins required fr any f the parameter-limited schedules submitted fr multiple-fuel units will be required t be submitted and apprved via the exceptin prcess. Nuclear Units are excluded frm eligibility fr Operating Reserve payments except in cases where PJM requests that nuclear units reduces utput at PJM s directin r where a physical prblem at a nuclear unit requires a risk premium and that risk premium is submitted t and accepted by the MMU. Other specific circumstances will be evaluated n a case-by-case basis by PJM and the MMU. The fllwing business rules apply t Transmissin Custmers: Transmissin custmers may submit external bilateral transactin schedules and may indicate willingness t pay cngestin charges int either the Day-ahead Market r balancing market. In the Day-ahead Market, a transactin shall indicate willingness t pay cngestin charges by submitting the transactin as an up t cngestin bid. Up t cngestin bids shall be n greater than $50/MWh, and n less than - $50/MWh. Any up t cngestin transactin that bids higher than $50/MWh r less than -$50/MWh will be rejected. PJM will maintain an up-t date list f surce/sink cmbinatins that will be available fr Up t cngestin bidding n the PJM OASIS. Internal bilateral transactins may be designated as day-ahead r balancing market in PJM eschedules. Up-t cngestin bids, increment ffers, and decrement bids shall be supprted in the Day-ahead Market nly. Up t cngestin bids are cleared based n the ttal LMP price difference between the surce and the sink Curtailment Service Prviders The business rules that apply t Curtailment Service Prviders are set frth in Sectin PJM Activities The fllwing business rules apply t PJM activities: PJM shall pst n the emkt System, the PJM lad frecast, ttal bid demand, and Day-ahead Scheduling Reserve (Operating Reserve) bjective fr each hur f the next Operating Day by 1600 at the cmpletin f the day-ahead scheduling prcess. PJM shall pst frecasts f ttal hurly demand fr the next fur days and peak demand fr the subsequent three days. PJM shall pst hurly LMP, Cngestin Price, and Lss Price values fr the next perating day at the cmpletin f the day-ahead scheduling prcess at PJM

31 Sectin 2: Overview f the PJM Energy Markets PJM shall pst the schedule f demand, supply, and bilateral transactins fr private viewing by market participants. PJM may perfrm supplemental resurce cmmitments after the day-ahead schedule is psted in rder t maintain reliable peratin. Such supplemental cmmitments are based n minimizing startup and n-lad csts. During the varius resurce cmmitment analyses, PJM may limit its dependence n Cmbustin Turbines t prvide reserves in rder t maintain reliable peratinal standards. Such limits shall be based n past perfrmance f these units. PJM's market pwer mitigatin prcedure cntinues under the energy market prcedure. If transmissin limits are identified during the day-ahead scheduling prcess r during real-time peratins, the apprpriate generatrs (thse fr which the wner fails the Three-Pivtal Supplier Test as detailed in Sectin paragraphs (e) and (f) f the PJM Operating Agreement) are ffer-capped. Units are ffer-capped at lesser f their cst-based r price-based schedules, including start-up and n-lad cmpnents. Specific details regarding determinatin f cst-based ffers may be fund in PJM Manual M-15 (Cst Develpment Guidelines) and Sectin f the PJM Operating Agreement. Fr the Day-ahead Market, the ffer caps will apply fr the length f time the unit is scheduled. Nn-CT units ffer-capped in the Day-ahead Market will be ffer-capped in the realtime market. Units ffer-capped in the real-time market shall remain ffer-capped until the unit s minimum run time is exhausted. Once the minimum run time fr a particular unit expires in the real-time market, if that unit is n lnger needed t cntrl any f the cnstraints fr which it was riginally started but the unit is kept n-line, the decisin as t whether the unit remains ffer-capped will be made as fllws: If PJM needs the unit fr ecnmics (n its price-based ffer) and the unit is nt required t relieve a current r anticipated cnstraint, the unit will be un-capped. If released by PJM, any subsequent ffer-capping decisin fr a unit will be determined by the Three-Pivtal Supplier Test. Units remain eligible t set LMP when ffer-capped. Offer-capping is suspended in Scarcity Pricing Regins during scarcity cnditins, as defined and detailed in Sectin 6A f the PJM Operating Agreement and PJM Manual M-13 (Emergency Prcedures). Units brught n-line fr ecnmics prir t cnstrained cnditins will nt be ffercapped. Once the price-based switch is set t price (set by PJM upn request frm generatin wner), the generatr wner cannt return t a cst-based ffer (cstcapped r histric LMP-capped). Price-sensitive demand can set LMP in the Day-ahead Market. (Due t cmmunicatin infrastructure challenges, price-sensitive demand cannt currently set LMP in the real-time market.) PJM

32 Sectin 2: Overview f the PJM Energy Markets Mechanical/Technical Rules A valid generatr ffer cnsists f the fllwing elements: Fr an internal Generatin Capacity Resurce a valid generatr ffer cnsists f a price-based schedule (if the unit has switched t price) and at least ne cst-based schedule. The default values fr the schedules are: Day-ahead Market switch is yes (1). Balancing market switch is yes (1). Use start-up & n-lad switch is yes (1). Use ffer slpe switch is n (0). Cndense available switch is blank r n (0). Startup and n lad csts are zer. Hurly ecnmic max/min and emergency max/min are the unit level ecnmic and emergency MW limits, respectively. Minimum dwn time, minimum run time, start times, and ntificatin times are zer. Maximum run time and maximum number f starts per week are infinity. The default fr incremental ffer curve data is $0. If the last MW pint n the segment curve is less than the maximum emergency limit, then the curve is extended up t the emergency maximum limit using zer slpe frm the last incremental pint n the curve. Fr an external resurce r a nn-capacity Resurce, a valid generatr ffer cnsists f a price-based schedule. The default values fr the schedules are: Day-ahead Market switch is yes (1). Balancing market switch is yes (1). Use start-up & n-lad switch is yes (1). Use ffer slpe switch is n (0). Cndense available switch is blank r n (0). Startup and n-lad csts are zer. Hurly ecnmic max/min and emergency max/min are the unit level ecnmic and emergency MW limits, respectively. Minimum dwn time, minimum run time, start times, and ntificatin times are zer. Maximum run time and maximum number f starts per week are infinity. The default fr incremental ffer curve data is $0. If the last MW pint n the segment curve is less than the maximum emergency limit, then the curve is extended up t the emergency maximum limit using zer slpe frm the last incremental pint n the curve. PJM

33 Sectin 2: Overview f the PJM Energy Markets Valid ffers fr demand bids, price sensitive and fixed, cnsist f the fllwing items: MW, with a default value f 0 MW. Demand bids shuld nt include lsses. Lcatin (transmissin zne, aggregate, r single bus) Price at which demand shall be curtailed (fr price-sensitive bids) Mdeling Fixed transactins, including increment ffers and decrement bids, are mdeled in the Resurce Cmmitment. Up-t cngestin transactins are nt mdeled in the cmmitment, but are handled in the day ahead dispatch. PJM des nt cmmit additinal generatin t supprt up-t cngestin transactins. The day-ahead security analysis treats increment ffers and decrement bids injectins as distributed lad (r generatin) that create an imbalance where physical lad and generatin d nt exist. External bilateral transactins with surce = interface bus are mdeled as generatin at the surce bus lcatin. This is the case fr bth dispatchable and nndispatchable transactins. External bilateral transactins with sink = interface bus are mdeled as a lad at the sink bus lcatin. This is the case fr bth dispatchable and nn-dispatchable transactins. Only fixed transactins and transactins invlving external aggregate resurces are mdeled in the Resurce Cmmitment (RSC) fr the Day-ahead Market Day-ahead Lcatinal Marginal Price (LMP) Calculatins The day-ahead LMP calculatin is based n the first resurce cmmitment, which has the bjective t satisfy the day-ahead bid demand, plus the PJM Day-ahead Scheduling Reserve (Operating Reserve) bjective requirement fr that level f bid demand. The calculatin c-ptimizes Day-ahead Scheduling Reserve (DASR) and Day-ahead (DA) energy prices. The fllwing resurces are eligible t set LMP values in the Day-ahead Market: all pl-dispatchable steam units pl-scheduled CTs and diesels whse bid price is at r belw the system marginal cst dispatchable external resurce ffers increment ffers cmmitted Ecnmic Lad Respnse bids Demand bids that are eligible t set LMP values in the Day-ahead Market are pricesensitive demand bids and decrement bids. Transactins that bid up t cngestin charges are eligible t set LMP values in the Day-ahead Market. PJM

34 Sectin 2: Overview f the PJM Energy Markets Settlements Data Requirements can be fund in M28: Operating Agreement Accunting. 2.4 Real-time Lcatinal Marginal Price (LMP) Calculatins The PJM Real-time Lcatinal Marginal Price (LMP) calculatin prcess cnsists f several prgramming mdules that are executed as part f the real-time sequence. The real-time sequence executes every five minutes n the PJM Energy Management System (EMS). A functinal diagram f the PJM LMP Mdel is shwn in Figure 1. As indicated in Figure 1, the main mdules f the PJM LMP Mdel are: Unit Dispatch System (UDS) PJM State Estimatr LPA Preprcessr Lcatinal Pricing Algrithm (LPA) Each f the PJM LMP mdules is described in detail belw. 2.5 Unit Dispatch System The Unit Dispatch System (UDS) is a sftware tl that prvides the PJM dispatchers with the capability t manage changes in lad, generatin, interchange, and transmissin PJM

35 Sectin 2: Overview f the PJM Energy Markets cnstraints simultaneusly n a near real-time basis, by prviding recmmended dispatch slutins. The UDS evaluates varius system cnditins t prduce a dispatch slutin fr a user-selected lk-ahead time. This allws the peratr t simultaneusly manage multiple transmissin cnstraints. The Unit Dispatch System is nt a stand-alne system. It is an applicatin that prcesses data frm the markets database and ther PJM systems. UDS executes a dispatch slutin autmatically every five minutes r when executed by the peratr. T calculate the slutin, UDS lks at nline and available resurces, resurce ffer data, frecasted lad, scheduled and current interchange, ACE (Area Cntrl Errr), as well as varius ther input parameters. Real-time data surces include: Lad frecast data frm EMS ACE, steam deviatin, regulatin signal(s) frm EMS Cnstraint data - unit sensitivities frm EMS State Estimatr utput frm EMS Outage data frm edart Transactin data frm EES The applicatin then prduces three cases with each slutin slving the Security Cnstrained Ecnmic Dispatch prblem. Each f these slutin cases cntains: A recmmended set f znal dispatch rates A list f exceptins t the dispatch rates fr cnstraint cntrl Individual resurce dispatch rates Individual Resurce Desired MW level Fr the purpse f Real-time LMP, the Individual Resurce dispatch rates are the $/MW value frm the resurce ffer curve crrespnding t either the limited r unrestricted desired MW level. The limited desired MW value takes int accunt unit restrictins such as ramp rate limits, ecnmic minimum, and ecnmic maximum. In cntrast, the unrestricted desired MW value ignres ramp rate limits. UDS gathers transmissin cnstraint infrmatin frm the EMS and develps its dispatch slutin based n using the mst ecnmic resurces t cntrl a given cnstraint. The ptimizatin that takes place when the UDS executes ensures that the ptimal dispatch slutin is reached respecting all binding transmissin cnstraints. When the peratr apprves a recmmended slutin, the znal dispatch rates and/r individual resurce MWs are bridged t the EMS, where they are autmatically sent ut t resurces r lcal cntrl centers. PJM

36 Sectin 2: Overview f the PJM Energy Markets In additin t being used fr ecnmic dispatch, results f each apprved slutin are used as input t the Real-time LMP calculatin. When the peratr apprves a recmmended slutin, the fllwing data is sent t the Real-time LMP calculatin: Individual Resurce dispatch rates Resurce specific Desired MW level (UDS Des MW) Binding transmissin cnstraints 2.6 PJM State Estimatr The Real-time LMP calculatin depends upn having a cmplete and cnsistent pwer flw slutin as input. This input requirement can be achieved by using a state estimatr. The state estimatr is a standard pwer system peratins tl whse purpse is t prvide a base case pwer flw slutin fr input int ther cmputer prgrams. The state estimatr uses actual perating cnditins that exist n the pwer grid (as described by metered inputs) alng with the fundamental pwer system equatins t calculate the remaining flws and cnditins that are nt metered. Since the state estimatr slutin prvides a cmplete and cnsistent mdel f actual perating cnditins based upn bservable (metered) input and an underlying mathematical mdel, it can be used t prvide the basis fr the Lcatinal Marginal Price calculatins. The inputs t the state estimatr are the available (metered) real-time measurements, the current status f equipment (lines, generatrs, transfrmers, etc.), and the bus lad distributin factrs. This standard industry tl depends upn data redundancy and the underlying physical and mathematical relatinships f the pwer system t prvide a slutin with less errr than the riginal measurements. Therefre the state estimatr can crrect bad data and calculate missing data in the mdel t prvide a cnsistent representatin f existing netwrk cnditins. The PJM state estimatr is run n a thirty-secnd cycle and can prvide the fllwing inputs t the PJM LMP Mdel, n a five-minute basis: AC pwerflw slutin Actual generatr MW utput Bus lads Tie line flws MW lsses by transmissin zne Actual MW flw n any cnstrained transmissin facility PJM

37 Sectin 2: Overview f the PJM Energy Markets 2.7 Lcatinal Pricing Algrithm (LPA) Preprcessr Since the Real-time LMP calculatin is based n actual resurce utput rather than a theretical ptimal dispatch, it is necessary t screen resurces t determine if they are eligible t participate in the Real-time LMP calculatin. The LPA Preprcessr perfrms this screening functin by analyzing the fllwing t determine if a resurce is fllwing ecnmic dispatch requests: Resurce state estimated MWh utput (aka Real-time MWh r SE MW) Resurce ffer price curves Ecnmic dispatch rates Desired MW level fr each resurce that was specified by UDS The prgram therefre acts as a real-time perfrmance mnitring functin fr resurces that have designated themselves as dispatchable. Dispatchable resurces whse actual MW utput is 110% r less than the desired MW level are cnsidered t be fllwing the ecnmic dispatch instructins and are therefre eligible t be passed thrugh t the LPA as eligible resurces. This evaluatin includes any resurces that are specifically requested by the UDS prgram t perate ut f ecnmic merit rder dispatch in rder t cntrl a transmissin cnstraint. These resurces are designated as eligible t set LMP if they are n-line and fllwing the dispatch instructin. When designated, an eligible t set LMP flag is set fr each resurce fr each applicable 5-minute interval within an perating hur. The LPA Preprcessr als screens external bilateral transactins that are designated as dispatchable t determine if their ffer data is cnsistent with current dispatch rates and if they are therefre eligible t set LMP. Resurces that are declared as must run and nt fllwing PJM s dispatch, resurces that are designated as Fixed Gen in the emkt system, and resurces that are nt fllwing ecnmic dispatch requests based n the criteria utlined abve will nt be eligible t set Real-time LMPs. The ffer price f eligible resurces crrespnds t a value derived frm their applicable ffer curve (r MW schedule fr external bilateral transactins). The LPA Preprcessr calculates this Real-time ffer value using the fllwing criteria: If the resurce s state estimated MW value is less than r equal t the desired MW value, then the Real-time resurce ffer value is calculated by cmparing the state estimated MW utput t the resurce s ffer curve. If the resurce s state estimated MW value is greater than the desired MW value, then the Real-time resurce ffer value is calculated as its dispatch rate. The eligible resurces are intrduced t the LPA and are mdeled at actual MW utput with a small bandwidth t allw fr slutin tlerance. Resurces that are nt eligible t participate in Real-time LMP calculatins are mdeled as ineligible resurces with their MW utput fixed at the actual MW value frm the state estimatr slutin. PJM

38 Sectin 2: Overview f the PJM Energy Markets Figure 2 belw shws hw the LPA Preprcessr determines the list f eligible units and transactins. Input State Estimatr emkt UDS Real-time Output Levels (SE MW) Resurce Offer Dispatch Rates (Znal/Unit) and UDS LMP Start Data LPA Preprcessr Yes Desired MW Resurce On-Line (SE MW > 0)? Yes Resurce type = CT? N Ec Min = Ec Max? N Unit Offer Price <= Dispatch Rate N Yes N Yes Resurce Ineligible fr LPA N Unit Type = Steam? N SE MW <= 110% f UDS LMP Desired MW Yes Yes Set Resurce Offer Price = Marginal Cst Resurce Eligible fr LPA End Figure 2 Output List f Resurces Eligible fr LPA LPA PJM

39 Sectin 2: Overview f the PJM Energy Markets 2.8 Lcatinal Pricing Algrithm The functin f the Lcatinal Pricing Algrithm (LPA) is t determine the Real-time LMP values n a five minute basis. The LPA calculates prices fr each f the PJM ndes in the state estimatr mdel and fr interface busses used as a prxy fr transfers t and frm PJM and external cntrl areas. The Real-time LMPs are defined as the cst t serve the next increment f lad at each nde bus lcatin fr the current system state estimated perating pint, taking int accunt eligible resurce real-time ffer prices and the buses lcatin with respect t transmissin limitatins and incremental system lsses. The LPA is an incremental linear ptimizatin prgram that is frmulated at the current state estimated perating pint. The bjective is t minimize the cst functin subject t the pwer balance cnstraint, generatin MW bunds, transactin MW bunds, any transmissin cnstraints that currently exist n the system and a nrmalized distributin f system lsses t a netwrk lcatin. Since the gal f the PJM LMP system is t calculate the Real-time LMP values based n actual system perating cnditins, the state estimated pwerflw slutin is used as a starting pint fr the incremental linear prgramming frmulatin. This pwerflw slutin is then linearized in rder t perfrm the LMP calculatins. As utlined in previus sectins, the set f eligible resurces is determined by the LPA Preprcessr and is input t the LPA as a set f cntrl variables. The set f eligible resurces, Pi, are mdeled in the frmulatin at the state estimated MW amunt with a small bandwidth t allw fr slutin tlerance. The cst cefficients in the bjective functin fr the eligible resurces are set equal t the Real-time bid that is calculated by the LPA Preprcessr based n the state estimated MW level and the incremental ffer (r bid) curve. These cst cefficients are assumed t have a cnstant slpe. PJM

40 Sectin 2: Overview f the PJM Energy Markets The PJM incremental linear prgramming frmulatin is as fllws: Minimize: Z Ci( Pi) Subject t: n Pi Lss 0 (pwer balance) i1 n i1 ij Lss P D Lss 0 A (netwrk cnstraints) i i min i i max i P P P (resurce limits) where: Pi - the change in rate f energy injectin (+) r energy cnsumptin (-) in MW fr resurce i. Lss - ttal system lss demand (in MW) as a functin f lcatin-specific injectins and withdrawals max P i - the upper MW bund fr resurce i min P i - the lwer MW bund fr resurce i i - an index ver the set f flexible resurces C i - the calculated real-time price fr resurce i A ij, - the sensitivities fr resurce bus i and active cnstraint j with respect t the reference bus lss D i nrmalized distributin f system lsses t netwrk lcatin i. The LMP values at each bus are by-prducts f the linear prgramming frmulatin that is listed abve. The LMP value at a particular lcatin is essentially the sum f the system marginal price f generatin at the reference bus plus the marginal cngestin price at the PJM

41 Sectin 2: Overview f the PJM Energy Markets lcatin assciated with the varius binding transmissin cnstraints plus the marginal lss price at the lcatin. The marginal values assciated with varius cnstraints in the ptimizatin prblem are called shadw prices. The shadw price f a cnstraint can be explained as the incremental change in value f the bjective functin fr a unit change in the limit (right hand side) f the cnstraint. Therefre, an equatin fr cmputing LMPs can be expressed in terms f these shadw prices. The LMP equatin can be written as fllws: LMP i 1 1 A ik ( SPk ) Pf i where: LMPi the Lcatinal Marginal Price at bus i = the system marginal price f generatin at the reference bus Ajk SPk the sensitivity fr bus i n binding cnstraint k the shadw price f cnstraint k Pf i =the penalty factr fr resurce i. Pf i Lss 1 Pi 1 Determinatin f LMPS fr De-Energized Busses Due t equipment utages, the main transmissin system may cntain sme de-energized busses fr which LMPs cannt be directly calculated. It is necessary fr settlement purpses that LMPs fr these de-energized busses be established. The methdlgy fr determining LMPs at de-energized busses is t assign t them the LMPs at their neighbring energized busses. The fllwing criteria fr a search is designed and implemented in the market clearing sftware. Search rules: 1. Search at the same vltage level. Check whether any f the ther busses belnging in the same vltage level as the de-energized bus is energized. If an energized bus is fund, set the LMP f the deenergized bus equal t the LMP f the energized bus. If a suitable replacement cannt be fund, prceed t step Search at the same statin. Check whether there are any energized busses lcated at a vltage level different frm the de-energized-bus vltage level but at the same statin. If an energized bus is fund, set the LMP f the de-energized bus equal t the LMP f the energized bus. If a suitable replacement cannt be fund, prceed t step 3. PJM

42 Sectin 2: Overview f the PJM Energy Markets 3. Search in the nearest neighbring statins. Rank all the transmissin lines ut f the de-energized bus statin in the descending rder f their admittances. Check whether there is any energized bus in the next statin available in the rank. If ne is fund, set the LMP f the de-energized bus equal t the LMP at the energized bus. If by searching all the neighbring statins n energized bus is fund, the PJM Market Operatr will be ntified that a de-energized bus exists fr which n suitable replacement culd be fund using the abve steps and will be required t manually search fr a suitable replacement. 2.9 PJM Real-time Lcatinal Marginal Price Verificatin Prcedure PJM cntinually mnitrs the prcesses that are assciated with the calculatin f Real-time LMPs. In the event f a data input failure, prgram failure, r lgging errr, crrective actins may be taken t ensure that the resulting Real-time LMPs are as accurate as is reasnably btainable. Data Input Failures (Stale cst data, stale dispatch rates, stale EMS data) r Prgram Failures (State Estimatr failure, LPA Failure, Cnstraint lgger failure) - Data input failures can ccur when telecmmunicatin prblems exist either n the PJM cmputer netwrk r n the data lines between PJM and PJM member cmpanies. If failures ccur within PJM s netwrk, all pssible steps will be taken t recver the riginal data fr use in LMP calculatin reruns. In the event f a prgram failure, an attempt will first be made t crrect the reasn fr the failure and t recalculate LMP values fr the affected intervals. If the failure cannt be crrected (due t a data input failure), and the riginal data cannt be recvered, PJM may utilize data frm the best available alternate data surces including, but nt limited t, backup systems, dispatcher lgs, raw telemetry data, and member cmpany data surces. In the event f a data input r prgram failure, LMP replacements will be perfrmed as utlined belw: If the stale data r prgram failure exists fr less than 6 intervals within the same hur then the affected intervals will be replaced with data frm the last successful interval. If the stale data r prgram failure exists fr mre than six intervals within the same hur then: If the hur is uncnstrained, the hurly LMP will be replaced with the hurly integrated dispatch rate, r If the system is cnstrained, the LMP values will be recalculated using data frm the best available surces. If the stale data r prgram failure exists fr less than 6 intervals within the same hur but the previus hur had 12 failures then: PJM

43 Sectin 2: Overview f the PJM Energy Markets If the hur is uncnstrained, the hurly LMP will be replaced with the hurly integrated dispatch rate, r If the system is cnstrained, the LMP values will be recalculated using data frm the best available surces. Lgging Errrs (Transmissin cnstraint lgging, CT lgging) The reference fr lgging times is the transmissin dispatcher manual lg. In the event f a lgging errr, LMP replacements will be perfrmed as utlined belw: Transmissin cnstraint r CT lgs entered (r remved) with a delay f less than fur intervals) N recalculatin f LMP is required. Transmissin cnstraint r CT lgs entered (r remved) with a delay f fur intervals r mre) The cnstraint and/r CT data will be crrected and LMP values will be recalculated. Transmissin cnstraint r CT lgs entered incrrectly - The cnstraint and/r CT data will be crrected and LMP values will be recalculated Price-Bunding Vilatins Under certain islated system cnditins the LPA itself may nt be able t calculate realtime LMPs as accurately as thers. Fr this reasn PJM institutes a Price-Bunding Tlerance t establish a reasnable difference between dispatch rates and ex-pst LMPs that when exceeded will result in disabling the psting f ex-pst LMPs. The Price-Bunding Tlerance des nt impact the LMP calculatin itself as it is nly used as a metric t determine the accuracy f the ex-pst slutin when cnsidering the dispatch instructins sent ut. The value f this tlerance is determined by PJM Market Operatins staff as system cnditins permit Calculatin f Ramp Limited Desired MWh Operating Reserve deviatins t generatrs that are perating at PJM s directin are based n a cmparisn f their Real-time desired MW with their Real-time MWh. Fr the purpses f settlement f Operating Reserve charges and credits, a Ramp-Limited Desired MW value will be used t determine whether a unit is fllwing PJM dispatch instructins as well as the actual quantity f deviatins that will be calculated when a unit be determined t nt be fllwing dispatch instructins. PJM will calculate a Ramp Limited Desired MW value fr units where the ecnmic minimum and ecnmic maximum are at least as far apart in real-time as they are in Day- Ahead. Real Time Ecnmic Minimum <= 105% f Day-ahead Ecnmic Minimum r Dayahead Ecnmic Minimum plus 5MW, whichever is greater. Real Time Ecnmic Maximum >= 95% Day-ahead Ecnmic Maximum r Dayahead Ecnmic Maximum minus 5MW, whichever is lwer. PJM

44 Sectin 2: Overview f the PJM Energy Markets PJM will determine a unit s Ramp-Limited Desired MW accrding t the fllwing calculatin: where the variables are: UDStarget = UDS basepint fr the previus UDS case AOutput = Unit s utput at case slutin time UDSLAtime = UDS lk ahead time Case_Eff_time = Time between base pint changes RL_Desired = Ramp limited desired MW UDS LMP Desired MWh is calculated by cmparing the hurly integrated UDS LMP t the unit s bid curve t determine a crrespnding MW value. This value is nt ramp-limited. In the event f technical difficulties where either a) UDS data des nt exist r b) there is nt a sufficient amunt f data t calculate a reasnable Ramp Limited Desired MW value, the UDS LMP Desired MW value will be used. PJM utilizes the Ramp-Limited Desired MW value t determine whether a unit is fllwing PJM dispatch instructins. PJM will calculate tw values, fr a generatin resurce that is perating at PJM s directin: the MW ff dispatch - is a defined term that is the lesser f the difference between the actual utput f a unit in MW and the UDS Basepint, r the difference between the actual utput f a unit in MW and its Ramp-Limited Desired MW. % ff dispatch. Ramp_Request t RL_Desired t (UDStarget AOutput ) t -1 t -1 (UDSLAtime ) t -1 AOutput Ramp_Request * Case_Eff_time t -1 t t -1 PJM will use the lesser f the difference between the actual utput and the desired dispatch pint, r the actual utput and Ramp-Limited Desired MW value. The % ff dispatch and MW ff dispatch will then be calculated as time-weighted averages f the values calculated with each dispatch slutin ver the curse f an hur. Pl-scheduled and dispatchable self-scheduled resurces perating abve ecnmic minimum will then be cnsidered t be fllwing dispatch if: (a) actual utput is between their Ramp-Limited Desired MW value and desired dispatch pint, (b) % ff dispatch is less than r equal t 10, r (c) hurly integrated Real-time MWh are within five percent (5%) r 5 MW (whichever is greater) f the hurly integrated Ramp-Limited Desired MW. PJM

45 Sectin 2: Overview f the PJM Energy Markets Dispatchable pl-scheduled and self-scheduled generatin resurces that fllw dispatch wn t be assessed Balancing Operating Reserve deviatins, and thse that d nt fllw dispatch will be assessed Balancing Operating Reserve deviatins based n hurly integrated Real-time MWh hurly integrated Ramp Limited Desired MW, pursuant t the rules as defined in PJM Manual M28. The rules prvide that Ramp-Limited Desired MW value must be used t determine real-time deviatins frm day-ahead schedules fr generatin resurces. (See Operating Reserve sectin f PJM Manual M28 fr a detailed descriptin f the calculatin f generatr deviatin charges) Using and Calculating Lcatinal Marginal Prices LMPs are used in the PJM Energy Market accunting t calculate charges r credits fr many f the market services, including: Spt Market Energy LMPs are used t calculate the charges fr Spt Market Energy purchases and the credits fr Spt Market Energy deliveries. (See Spt Market Energy Accunting sectin f PJM Manual M28 fr a detailed descriptin f these calculatins). Operating Reserve LMPs, alng with ther cmpnents, are used t determine whether prviders f Operating Reserve are prperly cmpensated fr their csts. (See Operating Reserve Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). Transmissin Cngestin Cngestin price cmpnents f LMPs are used in the calculatin f Transmissin Cngestin Charges and t determine the value f FTRs used in the calculatin f Transmissin Cngestin Credits. (See Transmissin Cngestin Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). Transmissin Lsses Lss price cmpnents f LMPs are used t determine the charges fr transmissin lsses. (See Transmissin Lsses Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). Emergency Energy LMPs are used t calculate the charges and credits fr Emergency purchases and sales between PJM and ther Cntrl Areas. (See Emergency Energy Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). PJM Lad Respnse Prgrams LMPs are used t calculate charges and credits fr the PJM Lad Respnse Prgrams (see Sectin 9: PJM Lad Respnse Prgrams Accunting f PJM Manual M28 fr a detailed descriptin f this calculatin). Metering Recnciliatin Weighted average LMPs are used t calculate mnthly meter errr crrectin charges between PJM Members and between Cntrl Areas. (See Metering Recnciliatin Accunting sectin f PJM Manual M28 fr a detailed descriptin f this calculatin). In general, generatrs are paid based n the generatr bus LMP and lads are charged based n the lad bus LMP. Transmissin Custmers r Energy Market Buyers are charged PJM

46 Sectin 2: Overview f the PJM Energy Markets fr cngestin n transactins based n the differential in surce and sink LMPs. LMPs are calculated n a peridic basis thrughut the Operating Day, nminally every five minutes. At the end f each hur, an average f the five-minute LMP values is cmputed. The resulting hurly LMPs are then used in the PJM Energy Market accunting, as described in the ther sectins f this manual. PJM Actins: PJM determines which CT units can set LMP. A CT can set LMP if it meets any f the fllwing criteria: The CT is n fr ecnmic reasns, the CT bid price is less than r equal t the dispatch rate, and the state estimatr MW utput f the CT is greater than zer. The CT is lgged n fr transmissin and a transmissin cnstraint is lgged (CTs lgged as n fr transmissin when a cnstraint is nt lgged are treated as ecnmic), the CT bid price is less than r equal t the dispatch rate, and the state estimatr MW utput f the CT is greater than zer. PJM determines which steam units can set LMP. A steam unit can set LMP if it meets the fllwing criteria: The steam unit is nt n fr transmissin cngestin and the bid price is less than r equal t the dispatch rate, and the state estimatr MW value is less than r equal t 110% f the unit s desired MW value. The steam unit is n fr transmissin cngestin and a transmissin cnstraint is lgged, the bid price is less than r equal t the dispatch rate, and the state estimatr MW value is less than r equal t 110% f the unit s desired MW value. PJM determines the pl transactins than can set LMP. A pl transactin can set LMP if the transactin bid price is less than r equal t the Dispatch Rate Day-ahead Settlement Day-ahead settlement is based n Day-ahead hurly LMPs. The cmpnents f Day-ahead hurly LMPs are the Day-ahead System Energy Price, Day-ahead Cngestin Price, and the Day-ahead Lss Price. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. FTR hlders receive cngestin credits based n hurly day-ahead Cngestin Price cmpnent f LMP values. Therefre, under tw-settlement, cngestin charges fr the hur frm bth day-ahead and real-time markets are distributed t FTR hlders based n target allcatins, which are calculated as a functin f day-ahead prices. Excess cngestin charges are distributed accrding t the methd described in Manual 28: Operating Agreement Accunting. Operating Reserves there are separate perating reserve credit calculatins fr the Day-ahead Market and the Balancing market. This ptin preserves the incentive fr demand and supply t bid int the Day-ahead Market based n their actual expectatins and preserves the incentive fr generatin t fllw real-time dispatch PJM

47 Sectin 2: Overview f the PJM Energy Markets signals. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details Balancing Settlement Balancing settlement is based n Real-time LMP values averaged ver the hur. The cmpnents f Real-time hurly LMPs are the Real-time System Energy Price, Realtime Cngestin Price, and the Real-time Lss Price. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. FTRs d nt apply t balancing settlement. FTRs apply t the day-ahead settlement nly, because f the market revenue adequacy issue. PJM cannt prvide financial hedging in bth the day-ahead and the balance markets, which in effect is selling the service twice Balancing Operating Reserve Cst Analysis Accunting fr Operating Reserve is perfrmed n a daily basis. A pl-scheduled resurce f a PJM Member is eligible t receive credits fr prviding Operating Reserve in the dayahead market and, prvided that the resurce was available fr the entire time specified in its ffer data, in the balancing market. The ttal resurce ffer amunt fr generatin, including startup and n-lad csts as applicable, is cmpared t its ttal energy market value fr specified perating perid segments during the day (including any amunts credited fr day-ahead scheduling reserve in excess f the day-ahead scheduling reserve ffer, any amunts credited fr synchrnized reserve in excess f the synchrnized reserve ffer plus pprtunity cst, and any amunts credited fr resurces prviding reactive services). If the ttal value is less than the ffer amunt, the difference is credited t the PJM Member. Credits are als prvided fr pl-scheduled energy transactins, fr generating units perating as synchrnus cndensers (nt fr synchrnized reserve nr fr reactive services) at the directin f PJM, fr cancellatin f pl-scheduled resurces, fr units whse utput is suspended r reduced due t a transmissin cnstraint r ther reliability reasn, fr units perfrming an annual black start test, and fr units prviding reactive services at the directin f PJM. The ffered price fr pl-scheduled resurces will be capped fr the entire perating day in the event either f the fllwing cnditins exists: The generatin resurce is identified in the day-ahead schedule t be dispatched ut f ecnmic merit rder t cntrl an identified transmissin cnstraint. The generatin resurce is dispatched t prvide quick start reserve fr reliability. In the event ne f the abve cnditins exists, the ffer prices will be capped at ne f the fllwing three levels, as specified in advance by the resurce wner: PJM

48 Sectin 2: Overview f the PJM Energy Markets The weighted average real-time Lcatinal Marginal Price at the generatin bus during all hurs ver the past six mnths in which the resurce was dispatched in ecnmic merit rder abve minimum. The incremental perating cst f the generatin resurce as determined in the PJM Cst Develpment Guideline Manual plus a 10% adder. An amunt negtiated between PJM and the Market Seller in the event the generatin resurce cannt recver csts with either f the first tw methds abve. The ttal cst f Day-ahead Operating Reserve fr the Operating Day is allcated and charged t PJM Members in prprtin t their ttal cleared day-ahead demand and decrement bids plus their cleared day-ahead exprts fr that Operating Day. The ttal cst f Balancing Operating Reserve fr the Operating Day is allcated and charged t PJM Members in prprtin t their lcatinal real-time deviatins frm day-ahead schedules and generating resurce deviatins during that Operating Day, r t PJM Members in prprtin t their real-time lad plus exprts during that Operating day fr generatr credits prvided fr reliability. In rder t determine the reasn why the Operating Reserve credit has been earned s that the charges related can be prperly allcated, PJM cnducts a Balancing Operating Reserve Cst Analysis (BORCA). PJM als calculates a Reginal Balancing Operating Reserve rate fr the csts f Operating Reserves that result frm actins t cntrl transmissin cnstraints that are slely within pre-defined regins in the RTO. Additinal csts f Operating Reserves that result frm actins t cntrl transmissin cnstraints that benefit the entire RTO will cntinue t be allcated equally t deviatins acrss the entire RTO. A detailed descriptin f the Reginal Balancing Operating Reserve Cst Analysis (BORCA) analysis can be fund in M11. The ttal cst f synchrnus cndenser payments (ther than that fr synchrnized reserve r reactive services) fr the Operating Day is allcated and charged t PJM Members in prprtin t their ttal lad plus their exprts during that Operating Day. The ttal cst f Reactive Services fr the Operating Day is allcated and charged t PJM Members in prprtin t their ttal lad in the applicable transmissin zne. The purpse f the Balancing Operating Reserve Cst Analysis is t separate thse Balancing Operating Reserve charges t be allcated t deviatins between Day-ahead schedules and Real-time quantities frm thse that shuld be allcated t real-time lad and exprts. The key factr in separating the allcatin is the determinatin f the particular units by which perating reserve credits were earned, and the units fr which thse credits shuld be allcated t deviatins as ppsed t thse units fr which thse credits shuld be allcated t lad and exprts. This cst determinatin will ccur in tw stages: thse units called n during the Reliability Analysis, and thse units called n t perate during the Operating Day. In bth cases, the prpsed changes establish clear, definitive, and bjective criteria that will be applied t such units t determine the reasn Balancing Operating Reserve credits were earned. PJM

49 Sectin 2: Overview f the PJM Energy Markets Resurces scheduled by PJM during its reliability analysis fr an Operating Day, the assciated Balancing Operating Reserve charges are allcated based n the reasn the resurce was scheduled. When a resurce is scheduled by PJM during its reliability analysis if the resurce is cmmitted t perate in real-time t augment the physical resurces cmmitted in the Day-ahead Energy Market t meet the frecasted real-time lad plus the Operating Reserve Requirement, then in such cases, Balancing Operating Reserve charges will be allcated t real-time deviatins frm day-ahead schedules. If hwever, a resurce is scheduled by PJM during its reliability analysis nt t accunt fr anticipated deviatins between day-ahead schedules and real time cnditins but instead t prvide additinal reliability margin, Balancing Operating Reserve charges must be allcated t real-time lad plus exprts. Balancing Operating Reserve credits earned by units called n by PJM t perate during the Operating Day fr which the LMP at the unit s bus des nt meet r exceed the unit s applicable ffer (cst r price) fr at least fur, five-minute intervals f at least ne clck hur during which the unit was running at PJM s directin will be allcated accrding t rati share f lad plus exprts. Balancing Operating Reserve credits earned by all ther units perating at PJM s directin in real-time will be allcated accrding t deviatins between Day-ahead schedules and Real-time quantities. The lgic behind this distinctin is that units called n in real-time fr which LMP exceeds their ffer fr a significant number f intervals while they are running are necessary t meet lad requirements respecting active transmissin cnstraints. Units called n at PJM s directin in real time fr which the LMP des nt exceed the unit s ffer were nt needed and were therefre perating in rder t ensure reliability is maintained as ppsed t accunt fr differences between day-ahead schedules and real-time system cnditins. PJM further cllects Balancing Operating Reserve credits that are accrued t resurces perating t manage lcal transmissin cnstraints. In rder t apprpriately cllect the csts f Balancing Operating Reserve fr lcal cnstraints within the pre-determined regins where the cnstraints existed, PJM calculates Reginal Balancing Operating Reserve adders. PJM calculates Reginal Balancing Operating Reserve adders fr the fllwing Regins within the PJM RTO. Western Regin f PJM RTO, cmprised f the AEP, APS, ATSI, CmEd, Duquesne, Daytn and DEOK Znes and Eastern Regin f PJM RTO made f the AEC, BGE, Dminin, PENELEC, PEPCO, ME, PPL, JCPL, PECO, DPL, PSEG and RE Znes. Balancing Operating Reserve credits that are accrued t resurces perating t cntrl transmissin cnstraints that benefit the entire RTO are charged as an RTO Balancing Operating Reserve rate. (See Operating Reserve Accunting sectin f PJM Manual M28 fr a detailed descriptin f the calculatin f allcatin charges). PJM

50 Sectin 2: Overview f the PJM Energy Markets Maximum Emergency Generatin in Day-ahead Market If the day-ahead demand bid MW cannt be satisfied with all available generatin at its ecnmic maximum MW limit, the prgram shall issue a Maximum Generatin Warning message due t a shrtage f ecnmic generatin in the Day-ahead Market. The prgram shall then perfrm the fllwing steps t achieve pwer balance: Increase all n-line generatin up t its maximum emergency MW limit. (Increase generatr MW prprtinately by rati f ecnmic maximum, if pwer balance is achieved prir t reaching maximum limits). Set LMP values equal t the highest ffer f all n-line generatin. Lad ff-line generatin that is designated as available nly fr maximum generatin emergency cnditins, as required. The rder f lading is based n ecnmic ffer data. Set LMP values equal t the highest ffer f all n-line generatin. If generatin is still nt enugh t achieve pwer balance after Step 2, drp any remaining price-sensitive demand t zer MW. Set LMP values equal t the highest price-sensitive demand bid that was cut in this step. If n price-sensitive demand was reduced in this step, the LMP values are set equal t highest ffer price f all n-line generatin (resulting frm Step 2). If pwer balance is nt achieved after step 3, reduce all lad prprtinately (by rati f lad MW) until balance is achieved. Set LMP values equal t the highest ffer price f all n-line generatin, the price frm Step 3, r the bid cap (presently $1000/ MWh), whichever is higher Minimum Capacity Emergency in Day-ahead Market If the day-ahead demand bid MW is less than the ttal generatin MW with all pssible generatin ff and with all remaining generatin at their ecnmic minimum MW limit, the prgram shall issue a Minimum Generatin Warning message due t an excess f ecnmic generatin in the Day-ahead Market. The prgram shall then perfrm the fllwing steps t achieve pwer balance. Reduce all n-line generatin dwn t its minimum emergency MW limit. (Reduce generatr MW prprtinately, by rati f ecnmic minimum, if pwer balance is achieved prir t reaching minimum limits). Set LMP values equal t the lwer f zer r t the lwest ffer price f all n-line generatin. Set LMP values t zer. Reduce all n-line generatin belw emergency minimum prprtinately (by rati f emergency minimum) t achieve pwer balance. PJM

51 Sectin 3: Overview f the PJM Regulatin Market Sectin 3: Overview f the PJM Regulatin Market Welcme t the Overview f the PJM Regulatin Market sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the PJM Regulatin Market (see Overview f PJM Regulatin Market ). A list f the PJM Regulatin Market Business Rules (see PJM Regulatin Market Business Rules ). 3.1 Overview f the PJM Regulatin Market The PJM Regulatin Market prvides PJM participants with a market-based system fr the purchase and sale f the Regulatin ancillary service. Resurce wners submit specific ffers fr Regulatin Capability and Regulatin Perfrmance, and PJM utilizes these ffers tgether with energy ffers and resurce schedules frm the emkt System, as input data t the Market Clearing Engine (MCE). MCE then ptimizes the RTO dispatch prfile and frecasts LMPs t calculate an hurly Regulatin Market Clearing Price (RMCP), Regulatin Market Perfrmance Clearing Price (RMPCP), which are used t derive the Regulatin Market Capability Clearing Price (RMCCP). These clearing prices are then used t determine the credits awarded t prviders and charges allcated t purchasers f the Regulatin service. PJM uses resurce schedules, regulatin, and energy ffers frm the emkt System as input data t the MCE t prvide the lwest cst alternative fr the prcurement f Ancillary Services and energy fr each hur f the perating day. The lwest cst alternative fr these services is achieved thrugh a simultaneus c-ptimizatin f Regulatin, Synchrnized Reserve, and energy. Within the c-ptimizatin, an RTO dispatch prfile is frecasted alng with LMPs fr the market hur and adjacent hurs. Using the dispatch prfile and frecasted LMPs, an pprtunity cst, adjusted by applicable perfrmance scre and benefits factr, is estimated fr each resurce that is eligible t prvide regulatin. The estimated pprtunity cst fr demand resurces will be zer. The estimated pprtunity cst is then added t the ttal regulatin ffer price t create the merit rder price. All available regulating resurces are then ranked in ascending rder f their merit rder prices, and the lwest cst set f resurces necessary t simultaneusly meet the PJM Regulatin Requirement, PJM Synchrnized Reserve Requirement, and prvide energy that hur is determined. The highest merit rder price assciated with this lwest cst set f resurces awarded regulatin becmes the RMCP fr that hur f the perating day, which will be used t set the RMPCP and RMCCP. Resurce wners may self-schedule Regulatin n any qualified resurce, and the merit rder price fr any self-scheduled Regulatin resurce is set t zer. PJM

52 Sectin 3: Overview f the PJM Regulatin Market In the after-the-fact settlement, any resurces self-scheduled t prvide Regulatin are cmpensated based n the prcesses described in Manual PJM Regulatin Market Business Rules Regulatin Market Eligibility Regulatin ffers may be submitted nly fr thse resurces electrically within the PJM RTO. T regulate, a resurce must meet the fllwing criteria: Generatin resurces must be able t prvide 0.1 MW f Regulatin Capability in rder t participate in the Regulatin Market. Demand Resurces must be able t prvide 0.1 MW f Regulatin Capability in rder t participate in the Regulatin Market. Generatin resurces must have a gvernr capable f AGC cntrl. Resurces must be able t receive an AGC signal. Resurces MW utput must be telemetered t the PJM cntrl center in a manner determined t be acceptable by PJM. New resurces must pass an initial perfrmance tests (minimum 75% cmpliance required). Current resurces that are qualified n the date f implementatin f regulatin market changes d nt need t re-qualify fr the signal that they currently fllw. Hwever, initial qualificatin des nt preclude a resurce frm being disqualified frm the regulatin market fr nn-perfrmance. Resurces must demnstrate minimum perfrmance standards, as set frth in the PJM Manual 12: Balancing Operatins, Sectin 4: Prviding Ancillary Services. Resurces shuld give pririty t the regulatin signal by nt allwing the sum f the regulating ramp rate and energy ramp rate t exceed the ecnmic ramp rate. Only after a regulating resurce has accunted fr the regulatin capability, may a generatr use net f the ecnmic base pint and the regulatin ramp rate t fllw the energy signal. Demand Resurces must cmplete initial and cntinuing training n Regulatin and Synchrnized Reserve Market as dcumented in Manual 40: Certificatin and Training Requirements, Sectin 2.6: Training Requirements fr Demand Respnse Resurces Supplying Regulatin and Synchrnized Reserve. The fllwing infrmatin must be supplied thrugh the emkt System: Resurce Regulating Status (available, unavailable, self-scheduled) Regulatin Capability (abve and belw regulatin midpint, MW) Regulatin Maximum and Minimum values, cnsidering any necessary ffsets (MW) Regulatin Signal Type RegA r RegD PJM

53 Sectin 3: Overview f the PJM Regulatin Market Cst-Based Regulatin Offer ($/MWh): This value will be validated using the unitspecific perating parameters submitted with the regulatin ffer and the applicable $12/MWh regulatin margin adder. The prtins f the cst based ffer are split int: Regulatin Capability prtin capturing the Fuel Cst Increase and Unit Specific Heat Rate Degradatin due t Operating at Lwer Lads. The margin adder may nly be added t the Regulatin Capability prtin; and, Regulatin Perfrmance prtin representing Cst Increase due t Heat Rate Increase during nn-steady state peratin and Cst Increase in VOM. The $/MW value determined in this step will be cnverted t $/ΔMW by multiplying the value by the rati f ΔMW/MW fr the applicable signal fr that ffer. Price-Based Regulatin Offer ($/MWh, ptinal): This value is capped at $100/MWh, and its submissin is ptinal n the part f the market participant. The prtins f the cst based ffer are split int: Regulatin Capability prtin the capturing the resurce wner s price t reserve MWs fr regulatin in $/MW; and, Regulatin Perfrmance prtin capturing the resurce wner s price t prvide regulatin mvement in $/ΔMW. The $/MW value determined in this step will be cnverted t $/ΔMW by multiplying the value by the rati f ΔMW/MW fr the applicable signal fr that ffer. In additin t the cst-based regulatin ffer price, each market participant may als submit additinal infrmatin t supprt the cst-based ffer price. Using the calculatins in Manual M-15: Cst Develpment Guidelines, PJM will validate the cst-based regulatin ffer price t ensure that it des nt exceed actual regulating cst as determined by this manual, plus the applicable regulatin margin adder. Any cst-based ffer prices that exceed this value will be rejected by the emkt System. An example f this calculatin is available n the PJM website at If a market participant des nt submit a cst-based regulatin ffer price they will nt be permitted t participate in the PJM Regulatin Market until such ffer has been validated. Any participants that d nt submit any f the supprting parameters belw will have their cst-based regulatin ffer price capped at the margin adder f $12/MWh. The fllwing ptinal parameters may be submitted in the emkt System t supprt the cst-based regulatin ffer price. If any f these parameters are nt submitted they will default t zer. Heat EcMax [BTU/kWh]: The heat rate at the default ecnmic maximum fr a resurce. The ecnmic maximum that will crrespnd t this rate value will be PJM

54 Sectin 3: Overview f the PJM Regulatin Market the default ecnmic maximum that is shwn n bth the Daily Regulatin Offers and Unit Details pages. Heat RegMin [BTU/kWh]: The heat rate at the default regulatin minimum fr a resurce. The regulatin minimum that will crrespnd t this rate value will be the default regulatin minimum that is shwn n bth the Daily Regulatin Offers and Unit Details pages. VOM Rate [$/MWh f Regulatin]: The increase in VOM resulting frm perating the regulating resurce at a higher heat rate than is therwise ecnmic fr the purpse f prviding regulatin. Fuel Cst [$/MBTU]: The fixed fuel csts f the resurce. This value will be used t determine the heat rate adjustments during steady-state and nn steady-state peratin fr the purpse f prviding regulatin Regulatin Market Data Timeline Cst-based and Price-Based Regulatin Offer(s) and any applicable cst infrmatin must be supplied prir t 6:00 p.m. day-ahead and is applicable fr the entire 24-hur perid fr which it is submitted. Resurce Regulating Status, Regulatin Capability, and Regulatin Maximum and Regulatin Minimum infrmatin may be submitted r changed up until sixty (60) minutes prir t the beginning f the perating hur, at which time the Regulatin market clses. In the event that the Regulatin Maximum and Regulatin Minimum limits are nt the mst restrictive fr a given resurce (i.e. the Regulatin Maximum the lwest f all the high limits and the Regulatin Minimum the highest f all the lw limits), the regulatin sftware will utilize the mst restrictive minimum and maximum f all applicable limits fr real time. Shuld a unit wish nt t participate in the regulatin market in any given hur n the perating day, the fllwing update shuld be made at least 60 minutes prir t the perating hur in the Regulatin Updates screens f the emkt System: Set Offer MW t zer Set Available status t Nt Available. Shuld a unit s regulatin perating parameters change after the regulatin market clses fr an hur, the fllwing changes may be made thrugh direct cmmunicatin with the PJM Scheduling Crdinatr: Resurce Regulating Status Available t unavailable Self-scheduled t unavailable High Regulatin Limit may be decreased but nt increased and Lw Regulatin Limit may be increased but nt decreased. Regulating capability may be decreased but nt increased. PJM

55 Sectin 3: Overview f the PJM Regulatin Market Regulatin Maximum capability may be decreased but nt increased and Regulatin Minimum capability may be increased but nt decreased. Any resurce that is unavailable fr energy when the Regulatin market clses and becmes available during the perating hur may als be made available r selfscheduled fr regulatin. Any assciated regulatin ffer infrmatin may be changed fr such resurces, since nne was cnsidered in the calculatin f RMCP. Resurces that are self-scheduled fr energy but d nt have an available bandwidth abve the self-scheduled value and belw the applicable maximum greater than r equal t twice the regulatin ffer cannt be evaluated fr the full amunt f the ffer. Such resurces will be evaluated fr regulating capability equal t half the bandwidth available Regulatin Bilateral Transactins Bilateral regulatin transactins may be reprted t PJM. Such reprted bilateral regulatin transactins must be fr the physical transfer f regulatin and must be reprted by the buyer and subsequently cnfirmed by the seller thrugh the emkt System n later than 1600 the day after the transactin starts. Bilateral transactins that have been reprted and cnfirmed may nt be changed; they must be deleted and rereprted. Deletin f a reprted bilateral transactin is interpreted as a change in the end time f the transactin t the current hur, unless the transactin has nt yet started. The buyer n the transactin submits the MW amunt, the seller, and the start and end time f the transactin via the emkt System. The seller cnfirms the transactin via the emkt System by 1600 the day after the start date f the bilateral transactin. Payments and related charges assciated with the bilateral regulatin transactins reprted t PJM shall be arranged between the parties t the bilateral cntract. A buyer under a bilateral regulatin cntract reprted t PJM agrees that it guarantees and indemnifies PJM, PJM Settlement, and the market participants fr the csts f any purchases by the seller in the Regulatin Market, as determined by PJM, t supply the reprted bilateral transactin and fr which payment is nt made t PJM Settlement by the seller. Upn any default in bligatins t PJM r PJM Settlement by a Market Participant, PJM shall nt accept any new bilateral reprting by the Market Participant and shall terminate all f the market participant s reprting f emkts schedules assciated with its bilateral regulatin transactins previusly reprted t PJM fr all days where delivery had nt yet ccurred Regulatin Requirement Determinatin The ttal PJM Regulatin Requirement fr the PJM RTO is determined in whle MW fr the n-peak ( ) and ff-peak ( ) perids f day. Further detail can be fund in Manual, Sectin Determining Regulatin Assignment. Demand Resurces will be limited t prviding 25% f the regulatin requirement. PJM

56 Sectin 3: Overview f the PJM Regulatin Market Regulatin Obligatin Fulfillment LSEs may fulfill their regulatin bligatins by: Self-scheduling the entity s wn resurces; Entering cntractual arrangements with ther market participants; r Purchasing regulatin frm the regulatin market Regulatin Offer Perid Resurce wners wishing t sell regulatin service must at least supply a cst-based regulatin ffer reflecting bth Regulatin capability ffer cst and the Regulatin perfrmance cst f the resurce by 6:00 p.m. the day prir t peratin, and the remainder f the necessary data prir t Regulatin market clsing as stated abve in the Regulatin Market Date Timeline sectin. Regulatin ffers are lcked as f 6:00 p.m. the day prir t peratin. The Markets Database is generally unavailable fr entry between 12 nn and 4:00 p.m. the day prir t peratin while the Day-ahead market is being cleared. All resurces listed as available fr regulatin with n ffer price have their ffer prices set t zer Regulatin Market Clearing PJM clears the regulatin market simultaneusly with the synchrnized reserve market, and psts the results n later than 30 minutes prir t the start f the perating hur. Dispatch Ecnmic ramp rate must be adjusted when resurces prvide regulatin t minimize the cnflict between energy and regulatin prducts. The segment specific ramp rates shuld be calculated frm the ecnmic ramp rate as fllws: Cleared Regulatin Capacity (AREG) Reduced Energy Ramp Rate = max 0, Ecnmic Ramp Rate 5 Minutes T increase cnsistency in the Individual Generatr Dispatch (IGD) set pint sent by PJM while a unit is regulating, the IGD set pint will nly mve up when the RT-SCED LMP justifies raising the resurce and resurce s net MW utput is near r abve the current set pint. The IGD setpint will nly mve dwn when the RT-SCED LMP justifies lwering the resurce and the resurce s net MW utput is near r belw the current set pint. A small dead band will be used t determine if the resurce s MW utput is near the current set pint. The settings fr this dead band will be the greater f 5 percent f the current net MW fr the resurce r 5 MW. PJM

57 Sectin 3: Overview f the PJM Regulatin Market Regulating Capability Fr each resurce, PJM will calculate an adjusted Capability Cst, as Adjusted Regulating Capability Cst $ = Capability $ Offer MW Benefits Factr f Offered Resurce Capability (MW) Histric Perfrmance Scre By dividing the regulating capability ffer by benefits factr f the specific ffered resurce and the histric perfrmance scre. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. Mileage and the Perfrmance Offer Mileage is the summatin f mvement requested by the regulatin cntrl signal a resurce is fllwing. It is calculated fr the duratin f the market hur fr each regulatin cntrl signal (i.e. RegA and RegD). Mileage RegA = Mileage RegD = n i=0 n i=0 RegA i RegA i 1 RegD i RegD i 1 PJM calculates the perfrmance-adjusted Perfrmance Cst, as Adjusted Perfrmance Cst $ Perfrmance Offer $ ΔMW = Mileage rati f Offered Resurce Signal Type ΔMW MW Benefits Factr f Offered Resurce Histric Perfrmance Scre Capability (MW) Similar t the Adjusted Regulating Capability Offer, the Adjusted Perfrmance Offer is adjusted by the benefits factr f the specific ffered resurce and the histric perfrmance scre f the resurce. Benefits factr is discussed later in this sectin. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. The perfrmance ffer is priced n a $ per change in MW, t nrmalize the perfrmance between signal types, the histrical mileage is a rlling 30-day average by the signal type that the resurce has qualified t fllw. PJM

58 Sectin 3: Overview f the PJM Regulatin Market Lst Opprtunity Cst Estimated resurce pprtunity cst is calculated as fllws: The Market Clearing Engine (MCE) ptimizes resurce energy schedules and frecasts LMPs fr the perating hur while respecting apprpriate transmissin cnstraints and Ancillary Service requirements. MCE utilizes the lesser f the available price-based energy schedule r mst expensive available cst-based energy schedule (the lst pprtunity cst energy schedule ), and frecasted LMPs t determine the estimated pprtunity cst each resurce wuld incur if it adjusted its utput as necessary t prvide its full amunt f regulatin. Regulatin pprtunity cst is divided int three cmpnents. The lst pprtunity cst incurred in the shulder hur preceding the initial regulating hur while the unit mves unecnmically int its regulating band t cmply with the next hur s regulatin assignment. The lst pprtunity cst incurred in the actual regulating hur frm reducing r raising the unit s utput unecnmically fr the purpse f prviding regulatin. The lst pprtunity cst incurred in the shulder hur fllwing the final hur f the regulatin assignment while the unit mves frm its unecnmic regulatin set pint back t its ecnmic set pint. The apprximate frmula fr the lst pprtunity incurred during the shulder hurs can be defined as: LMP SH ED * GENOFF * TIME, where: a. LMP SH is the frecasted shulder hur LMP at the generatr bus, b. ED is the price frm the lst pprtunity cst energy schedule assciated with the setpint the resurce must maintain t prvide its full amunt f regulatin, and c. GENOFF is the MW deviatin between ecnmic dispatch and the regulatin setpint. d. TIME is the percentage f the hur it wuld take the unit t reduce GENOFF MWs using the applicable ffer-in ramp rate. The apprximate frmula fr the lst pprtunity cst incurred during the regulating hur is: LMP ED * GENOFF, where: a. LMP is the frecasted hurly LMP at the generatr bus, PJM

59 Sectin 3: Overview f the PJM Regulatin Market b. ED is the price frm the lst pprtunity cst energy schedule assciated with the setpint the resurce must maintain t prvide its full amunt f regulatin, and c. GENOFF is the MW deviatin between ecnmic dispatch and the regulatin setpint. All unit-specific lst pprtunity csts will be divided by the benefits factr f the specific ffered resurce and the resurce s histric perfrmance scre fr the purpses f cmmitment and setting the regulatin market clearing prices. Benefits factr is discussed later in this sectin. The histric perfrmance scre is discussed in Manual 12 Balancing Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. Adjusted Lst Opprtunity Cst $ = Estimated Lst Opprtunity $ MW Benefits Factr f Offered Resurce Capability (MW) Histric Perfrmance Scre Bth lst pprtunity cst calculatins are defined simplistically fr the purpse f the manual. The actual calculatins are integratins that may be visualized as the area n a graph enclsed by the lst pprtunity cst energy schedule, the pints n that curve crrespnding t the resurce s desired ecnmic dispatch and the setpint necessary t prvide the full amunt f regulatin, and the LMP. PJM may call n resurces nt therwise assigned n rder t prvide regulatin, in accrdance with PJM's bligatin t minimize the ttal cst f energy, perating reserves, regulatin, and ther ancillary services. If a resurce is called n by PJM fr the purpse f prviding regulatin, the resurce is eligible fr recvery f Regulatin lst pprtunity csts as well as start-up, n-lad, and energy csts. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. Resurces nt eligible r with n lst pprtunity assciated with prviding regulatin: Ttal Offer Energy resurces that are self-scheduled t prvide energy and d nt supply an energy ffer. Demand Resurces Ntwithstanding the abve, resurces that d nt submit an energy ffer curve will have a Lst Opprtunity Cst f zer. Each resurce must be ranked based n the ttal expected cst f that resurce regulating. PJM calculates the Adjusted Ttal Offer f the resurce as fllws: PJM

60 Sectin 3: Overview f the PJM Regulatin Market Adjusted Ttal Offer Cst ($) = Participant Data Perfrmance Offer ($/ΔMW) Capability Offer ($/MW) MW Offer (MW) Adjusted Regulatin Capability Cst $ + PJM Data Histrical Accuracy Scre Adjusted Lst Opprtunity Cst $ Benefits Factr + Adjusted Perfrmance Cst ($) Regulatin Requirement Inter-Tempral Opprtunity Cst TPS Test Results Crss Prduct Opprtunity Cst Lst Opprtunity Cst Clearing Prcess Regulatin Resurce Cmmitments Ttal Incremental Cst f Marginal Resurce Perfrmance Clearing Price = Highest Adjusted Perfrmance Offer Capability Clearing Price = Residual f Ttal Incremental Cst Regulatin Market Clearing Prices MCE ranks all available regulating resurces in ascending merit rder price, and simultaneusly determines the least expensive set f resurces necessary t prvide energy, regulatin and synchrnized reserve fr the perating hur taking int accunt any resurces self-scheduled t prvide any f these services. The Rank price is determined as fllws: Rank Price = Adjusted Ttal Offer Cst ($) Capability (MW) Shuld the MCE applicatin be unable t fulfill bth the Regulatin and Synchrnized Reserve requirements, regulatin receives the higher pririty. PJM will clear the market t meet the Regulatin Capability Requirement. The Regulatin Capability Requirement sets the amunt f regulating capability that PJM believes it wuld need t absrb sustained RTO ACE deviatins adjusted by the benefits factr f a specific ffered resurce and the resurce s histric perfrmance scre. Benefits factr is discussed later in this sectin. The histric perfrmance scre is discussed in Manual 12 Balancing PJM

61 Sectin 3: Overview f the PJM Regulatin Market Operatins, Sectin Disqualificatin and Requalificatin f a Resurce. The market will assign units until the cnstraint is met, by Regulatin Capability Requirement MW n i=0 Capability (MW) i Benefits Factr f Offered Resurce i Histric Perfrmance Scre i With the Regulatin Capability cnstraint satisfied, the Rank Price ($/MW) f the last assigned resurce sets the Regulatin Market Clearing Price (RMCP). This RMCP is used t derive the clearing price fr the Regulatin Capability and Regulatin Perfrmance cmpnents. First the Regulatin Market Perfrmance Clearing Price (RMPCP) is calculated by finding the maximum perfrmance ffer frm the set f all cleared resurces perfrmance ffers as fllws: Regulatin Market Perfrmance Clearing Price $/MW = max Assigned Resurces Perfrmance Offer $ ΔMW Actual Mileage f Offered Resurce Signal Type ΔMW/MW Benefits Factr f Offered Resurce Histric Perfrmance Scre Then the RMPCP is subtracted frm the RMCP fr the Regulatin Market Capability Clearing Price (RMCCP), which it the residual between the RMCP and RMPCP. Regulatin Market Capability Clearing Price $/MW = Regulatin Market Clearing Price $/MW RM Perfrmance Clearing Price $/MW The five minute regulatin clearing prices are psted in the edata user interface public view. RMCP(s) and ther billing determinant infrmatin is als available n the PJM website at If n Regulatin Market Results are psted t the emkt MUI fr an hur, PJM will cntinue the current assignments, as needed, int the un-psted hur. There will be n impact t the price calculatin, the real time hurly integrated Regulatin Clearing Prices will be used fr settlement. PJM

62 Sectin 3: Overview f the PJM Regulatin Market Benefits Factr Functin Regulating resurces can fllw either a RegA (traditinal) r RegD (dynamic) signal based n their resurces limitatin and business practices. The regulating resurces cleared in any hur can be any set f r mix f bth traditinal and dynamic resurces. There is an peratinal relatinship between the regulating resurce mix and hw the regulatin requirement is satisfied. This relatinship is included in the market clearing and settlement prcess as the Benefits Factr Functin because the relatinship is depicted as a curve. The benefits factr translates fast mving resurce s MWs int traditinal MWs r Effective MWs. These Effective MWs reflect the rate f substitutin between resurces fllwing the different regulatin signals. Fr market clearing, each dynamic resurce will be assigned a decreasing and unique benefits factr. The benefits factr f the ffered resurce r resurce specific benefits factr is the marginal pint n the benefits factr functin that aligns with the last MW that specific resurce will add t the dynamic resurce stack. The benefits factr ranges frm 2.9 t 0 where a benefits factr f 1 is equivalent t a traditinal resurce. The Benefits Factr Functin will be fixed during the initial deplyment. PJM will review the benefits factr as peratinal cnditins warrant the re-evaluate the relatinship when needed. These peratinal cnditins culd include, amng ther factrs, changes t the regulatin signal tuning parameters, changes in the set f resurces prviding regulatin service, and changes t the regulatin requirement. PJM

63 Sectin 3: Overview f the PJM Regulatin Market PJM determines the benefits factr based n the expected impact that fast-fllwing resurces have n the NERC reliability criteria. Determinatin f expected respnse will be based a cmbinatin f ff-line mdels, analysis f the regulatin signals, and the histrical peratinal data as it accumulates. Histrical peratinal data will be given increasing weight t the benefits factr determinatin ver time. Changes t the benefits factr functin will be made peridically after review at the Operating Cmmittee. Fr market settlement, the benefits factr f the last RegD MW selected will be used t adjust the cmpensatin fr all resurces fllwing the RegD signal. The net impact f the use benefits factr is t increase in the likelihd f dynamic resurces being selected in the clearing prcess, up t the pint f diminishing returns. Beynd the pint f diminishing returns (1 t 0), the benefits factr will decrease the likelihd f fast-fllwing resurces getting clearing. Three Pivtal Supplier PJM utilizes the Three Pivtal Supplier (TPS) Test in the regulatin market t mitigate market pwer as detailed in sectin 3.2.2A.1 f the PJM Tariff. Each supplier, frm 1 t n, is ranked frm the largest t the smallest ffered MW f eligible regulatin supply adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre in each hur. Suppliers are then tested in rder, starting with the three largest suppliers. In each iteratin f the test, the tw largest suppliers adjusted by the benefits factr f ffered resurce and the resurce specific perfrmance scre are cmbined with a third supplier adjusted by the benefits factr f ffered resurce and the resurce specific perfrmance scre, and the resulting cmbined supply is subtracted frm ttal effective supply adjusted by the benefits factr f ffered resurce and the resurce specific perfrmance scre. The resulting net amunt f eligible supply is divided by the regulatin requirement fr the hur adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre (D). Where j defines the supplier being tested in cmbinatin with the tw largest suppliers (initially the third largest supplier with j=3). Equatin 0-1 shws the frmula fr the residual supply index fr three pivtal suppliers (RSI3): RSI3 j n 2 S S S i i j i1 i1 D. Where j=3, if RSI3j is less than r equal t 1.0, then the three suppliers are jintly pivtal and the suppliers being tested fail the three pivtal supplier test. Iteratins f the test cntinue until the cmbinatin f the tw largest suppliers and a supplier j result in RSI3j greater than 1.0. When the result f this prcess is that RSI3j is greater than 1.0, the PJM

64 Sectin 3: Overview f the PJM Regulatin Market remaining suppliers pass the test. Any resurce wner that fails the TPS Test will be ffercapped. Regulating resurces are ffer-capped at the lesser f their cst-based r marketbased regulatin ffer price. An ffer-capped resurce will nly be ffer-capped fr a single hur at a time as the TPS Test is rerun fr each hur f the day. Resurce merit rder price ($/MWh) = Resurce regulatin ffer + estimated resurce pprtunity cst per MWh f capability adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre Hydr Units Since hydr units perate n a schedule and d nt have an energy bid, pprtunity cst fr these units is calculated as fllws: During thse hurs when a hydr unit is in spill, the ED value is set t zer such that the pprtunity cst is based n the full value f LMP. During the perating day, the perating cmpany is respnsible fr cmmunicating this cnditin t the PJM Scheduling Crdinatr, and indicating this cnditin n the Regulatin Updates page f the emkt System. If a hydr unit is cmmitted day-ahead with MW greater than zer, the frmula is the same as Sectin Regulatin Market Clearing and Dispatch abve, except the ED value is an average f the LMP at the hydr unit bus fr the apprpriate n-peak ( ) r ff-peak ( , ) perid, excluding thse hurs during which all available units at the hydr plant were perating. If this average LMP value is higher than the actual LMP at the generatr bus, the pprtunity cst is zer. Day-ahead LMPs are used fr the purpse f estimating pprtunity csts fr hydr units, and actual LMPs are used in the lst pprtunity csts fr settlement. If a hydr unit is brught n ut f schedule t prvide regulatin r nt cmmitted in day-ahead market with MWs greater than 0, the pprtunity cst is equal t the average LMP (calculated as stated abve) minus the actual LMP at the generatr bus. If the actual LMP is higher than the average, the pprtunity cst is zer. When determined t be ecnmically beneficial, PJM maintains the authrity t adjust hydr unit schedules fr thse units scheduled by the wner if the wner has als submitted a regulatin ffer fr thse units and made the units available fr regulatin. An example f Regulatin Hydr Lst Opprtunity Cst Calculatins can be fund n the PJM website at Regulatin Market Operatins The PJM Operatr maintains ttal Regulatin Znal capabilities within a +/- 2%, but n less than +/- 15MW bandwidth arund the RTO Regulatin Requirement. PJM

65 Sectin 3: Overview f the PJM Regulatin Market The PJM Operatr peridically evaluates the set f resurces prviding regulatin, and makes any adjustments t regulatin assignments deemed necessary and apprpriate t minimize the verall cst f regulatin. In the event f a regulatin excess, the PJM dispatcher deselects resurces beginning with the highest cst resurce currently prviding regulatin and mving dwnward. In the event f a regulatin deficiency, the PJM dispatcher selects resurces t prvide regulatin beginning with the lwest cst resurce currently nt prviding regulatin and mving upward. The RMCP and therefre RMPCP and RMCCP des nt change based upn regulating resurce adjustments made in real time. Any pprtunity csts that exceed the RMCP are credited after the fact n a resurce-specific basis. The PJM Energy Management System (EMS) will send a RTO based signal(s) t each Lcal Cntrl Center (LCC), as well as signals t individual resurces r plants as requested by the wner. The PJM Operatr cmmunicates any change in resurce regulating assignments t individual Lcal Cntrl Centers. Cmpany ttal in-service regulating capabilities are then telemetered back t the PJM EMS via the PJM data link. Resurce regulatin assignment changes during transitins between n-peak and ff-peak perids begin 30 minutes prir t the new perid, and are cmpleted n later than 30 minutes after the perid begins Settlements Please refer t Manual 28: Operating Agreement Accunting, Sectin 4: Regulatin Accunting fr settlement details. Regulatin settlement is a zer-sum calculatin based n the regulatin prvided t the market by generatin wners and purchased frm the market by LSEs. A resurce s regulatin perfrmance scre fr the hur r the prtin f the hur it is regulating will determine the resurce s eligibility fr regulatin credit and lst pprtunity cst fr that hur. A resurce whse perfrmance scre fr the hur r the prtin f the hur is belw 25% will frfeit regulatin credit and Lst Opprtunity fr that hur. Opprtunity cst is calculated as shwn abve in Sectin Market Clearing and Dispatch using actual integrated LMPs as ppsed t that which was frecasted. PJM then adjusts the pprtunity cst calculated fr each resurce based n the actual hurly integrated value f the real-time PJM regulatin signal t accunt fr the fact that the resurce may have been held abve r belw its regulatin setpint fr greater than half the hur and als adjusted by the resurce-specific benefits factr and the resurce specific perfrmance scre. Energy resurces that are self-scheduled t prvide energy and d nt supply an energy ffer are nt eligible t cllect pprtunity cst credits. These resurces will PJM

66 Sectin 3: Overview f the PJM Regulatin Market receive credit equal t the RMPCP and RMCCP times the amunt f regulatin selfscheduled n r assigned t them adjusted by the marginal benefits factr and the resurce s actual perfrmance scre fr an hur. Fr market settlement, the benefits factr f the last RegD MW selected will be used t adjust the cmpensatin fr all resurces fllwing the RegD signal. PJM

67 Sectin 4: Overview f the PJM Synchrnized Reserve Market Sectin 4: Overview f the PJM Synchrnized Reserve Market Welcme t the Overview f the PJM Synchrnized Reserve Market sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin, yu will find the fllwing infrmatin: An verview descriptin f the PJM Synchrnized Reserve Market (see Overview f PJM Synchrnized Reserve Market ). A list f the PJM Synchrnized Reserve Market Business Rules (see PJM Synchrnized Reserve Market Business Rules ). 4.1 Overview f the PJM Synchrnized Reserve Market The PJM Synchrnized Reserve Market prvides PJM participants with a market-based system fr the purchase and sale f the Synchrnized Reserve ancillary service. Resurce wners submit resurce-specific ffers t prvide Synchrnized Reserve, and PJM utilizes these ffers tgether with energy ffers and resurce schedules frm the emkt System, as input data t the Synchrnized Reserve and Regulatin Optimizer (SPREGO). SPREGO then ptimizes the RTO dispatch prfile and frecasts LMPs t calculate an hurly Synchrnized Reserve Market Clearing Price (SRMCP). This clearing price is then used t determine the credits awarded t prviders and charges allcated t purchasers f the Synchrnized Reserve service. PJM uses frecasted LMPs and resurce schedules frm the Synchrnized Reserve and Regulatin Optimizer (SPREGO) t estimate the amunt f incidental Synchrnized Reserve present n the PJM system due t ecnmic dispatch and this capability is designated as Tier 1. Tier 1 is prvided by any resurce that is n line, fllwing ecnmic dispatch, and capable f increasing its utput within ten (10) minutes fllwing a call fr Synchrnized Reserve. If the amunt f Tier 1 estimated fr a given hur is insufficient t meet the PJM Synchrnized Reserve Requirement, PJM must assign resurces t perate at a pint that deviates frm ecnmic dispatch in rder t prvide the remainder f the requirement. The extra capacity that must be cmmitted is designated Tier 2. The acquisitin f Tier 2 reserves is perfrmed jintly with regulatin and energy thrugh a simultaneus c-ptimizatin that prvides the lwest cst alternative fr the prcurement f Ancillary Services and energy fr that hur f the perating day. Within the c-ptimizatin, an RTO dispatch prfile is frecasted alng with LMPs fr that hur. Using the dispatch prfile and frecasted LMPs, an pprtunity cst (including energy usage) is estimated fr each resurce that is eligible t prvide Tier 2 synchrnized reserve. Demand resurces have an estimated pprtunity cst f zer. This estimated pprtunity cst is then added t the synchrnized reserve ffer price t create the merit rder price. All available Tier 2 synchrnized reserve resurces are then ranked in ascending rder f their merit rder prices, and the lwest cst set f resurces necessary t simultaneusly meet the PJM Synchrnized Reserve Requirement, PJM Regulatin Requirement, and prvide energy that hur is determined. The highest merit rder price assciated with this lwest cst set f PJM

68 Sectin 4: Overview f the PJM Synchrnized Reserve Market resurces awarded Tier 2 synchrnized reserve becmes the SRMCP fr that hur f the perating day. Resurce wners may self-schedule Synchrnized Reserve n any qualified resurce, and the merit rder price fr any self-scheduled Synchrnized Reserve resurce is set t zer. PJM simultaneusly ptimizes energy, Regulatin and Synchrnized Reserve, and assigns bth Regulatin and Synchrnized Reserve t the mst cst-effective set f resurces each hur f the perating day. In the after-the-fact settlement, any resurces self-scheduled t prvide Synchrnized Reserve are cmpensated at the hurly SRMCP. Any pl-scheduled resurces selected t prvide Synchrnized Reserve are cmpensated at the higher f the hurly SRMCP r their real-time pprtunity cst plus their Synchrnized Reserve ffer price. LSEs required t purchase Synchrnized Reserve are charged the hurly SRMCP plus their percentage share f pprtunity cst credits and Tier 1 credits. 4.2 PJM Synchrnized Reserve Market Business Rules Synchrnized Reserve Market Eligibility Synchrnized Reserve ffers may be submitted nly fr thse resurces lcated electrically within the Synchrnized Reserve Zne. Resurces participating in the synchrnized reserve market are divided int tw Tiers: Tier 1 is cmprised f all thse resurces n line fllwing ecnmic dispatch and able t ramp up frm their current utput in respnse t a synchrnized reserve event, r demand resurces capable f reducing lad within 10 minutes. Tier 2 cnsists f: that additinal capacity that is synchrnized t the grid and perating at a pint that deviates frm ecnmic dispatch (including cndensing mde) t prvide additinal spinning synchrnized reserve nt available frm Tier 1 resurces; and dispatchable lad resurces that have cntrls in place t autmatically drp lad in respnse t a signal frm PJM. All resurces perating n the PJM system with the exceptin f thse assigned as Tier 2 resurces are by definitin Tier 1 resurces. Any resurce capable f perating in cndensing mde r willing t perate with an utput less than that dictated by ecnmic dispatch may participate as a Tier 2 resurce. There is n qualificatin prcess fr Tier 2 resurces. Hwever, cnsequences exist as described belw fr respnse by Tier 2 resurces that are less than that which is cmmitted. The fllwing infrmatin must be supplied thrugh the emkt System: Synchrnized Reserve Ramp Rate fr Tier 1 resurces (MW/minute). A separate rate may be submitted fr multiple segments f a resurce s MW range, and these rates must be greater than r equal t the real-time ecnmic ramp rate(s) PJM

69 Sectin 4: Overview f the PJM Synchrnized Reserve Market submitted fr the resurce. Synchrnized reserve ramp rates that exceed ecnmic ramp rates must be justified via submissin f actual data frm past synchrnized reserve events t the PJM Perfrmance Cmpliance Department. Synchrnized reserve maximum fr Tier 1 resurces. This value represents the maximum MW utput a resurce can achieve in respnse t a synchrnized reserve event. Synchrnized reserve maximum must be greater than r equal t the ecnmic maximum fr the resurce except fr qualified resurces that have been granted exceptin due t their physical limitatin. Generatin resurces must be able t prvide 0.1 MW f Tier2 Synchrnized Reserve Capability in rder t participate in the Tier2 Synchrnized Reserve Market. Demand Resurces must be able t prvide 0.1 MW f Tier2 Synchrnized Reserve Capability in rder t participate in the Tier2 Synchrnized Reserve Market. Synchrnized Reserve Availability fr Tier 2 resurces. Resurces may be made available, unavailable, r self-scheduled t prvide Tier 2 synchrnized reserve. Synchrnized Reserve Offer Quantity fr Tier 2 resurces (MW). This quantity is defined as the increase in utput achievable by the resurce in ten (10) minutes, r the lad reductin achievable in ten (10) minutes. Synchrnized Offer Price fr Tier 2 resurces ($/MWh). Synchrnized Reserve Offer Prices will be capped at a maximum value f the resurce s O&M cst (as determined by the Cst Develpment Task Frce) plus $7.50/MWh margin. Energy use fr cndensing Tier 2 resurces (MW). This is the amunt f instantaneus energy a cndensing resurce cnsumes while perating in the cndensing mde. The value submitted as part f the synchrnized reserve ffer must be less than r equal t the actual energy cnsumed as bserved in real time. Shuld a resurce wish nt t participant in the Synchrnized Reserve market in any given hurs n the perating day, the fllwing update shuld be made at least 60 minutes prir t the perating hur in the Synchrnized Reserve Update screens f emkt: Set Offer MW t zer Set Available status t Nt Available. Cndense t gen cst. This is the cst f transitining a cndenser t the generating mde. The value submitted fr this cst must be less than r equal t the cndensing start cst. Shutdwn Csts. These are the csts a Demand Resurce incurs when reducing lad in respnse t a synchrnized reserve event. PJM

70 Sectin 4: Overview f the PJM Synchrnized Reserve Market Cndense Startup Cst. This is the actual cst assciated with getting a resurce frm a cmpletely ff-line state int the cndensing mde including fuel, O&M, etc. Cndense Hurly Cst. This is the hurly cst t cndense is equal t the actual, variable O&M csts assciated with perating a resurce in the cndensing mde, including any fuel csts. It des nt include any estimate fr energy cnsumed Cndense Ntificatin Time. The amunt f advance ntice, in hurs, required t ntify the perating cmpany t prepare the resurce t perate in synchrnus cndensing mde. The default value is 0 hurs. Spin as Cndenser. This is used t identify if a cmbustin turbine can be cmmitted fr synchrnized reserve as a cndenser. Tier 1 estimates fr Demand Resurces will equal zer Synchrnized Reserve Requirement Determinatin PJM will select resurces in each Synchrnized Reserve Zne hurly t prvide synchrnized reserve based n a c-ptimizatin between energy, regulatin and synchrnized reserve. Assignments will be cmmunicated t the resurce wners/peratrs by emkt r the apprpriate dispatcher. The RTO will be arranged int tw (2) Synchrnized Reserve Znes. All cmpanies within PJM, excluding the SERC cmpanies, are part f the ReliabilityFirst Crpratin (RFC) reliability regin and will thus be gruped tgether int a single synchrnized reserve zne. The SERC cmpanies are part f a separate reserve sharing agreement and therefre cmprise a secnd synchrnized reserve zne. The tw (2) synchrnized reserve znes cntain the fllwing cntrl znes: RFC Synchrnized Reserve Zne: PJM Mid-Atlantic AP AEP ATSI Daytn Duquesne CE DEOK Suthern (Dminin) Synchrnized Reserve Zne: Dminin Ttal PJM Synchrnized Reserve Requirement fr each Synchrnized Reserve Zne is determined in whle MW fr each hur f the perating day. PJM

71 Sectin 4: Overview f the PJM Synchrnized Reserve Market The RFC Synchrnized Reserve Zne Requirement is defined as that amunt f 10-minute reserve that must be synchrnized t the grid. The requirement will be defined as the greater f the ReliabilityFirst Crpratin (RFC) impsed minimum requirement r the largest cntingency n the system. The Suthern Synchrnized Reserve Zne Requirement is defined as the Dminin lad rati share f the largest system cntingency within VACAR; minus the available 15 minute quick start capability within the Suthern Synchrnized Reserve Zne. Nrth American Electric Reliability Cuncil (NERC) standards may impse greater requirements fr synchrnized reserve fllwing Disturbance Cntrl Standard (DCS) vilatins. Any such impsitins will be incrprated as an increase t the verall cntrl zne synchrnized reserve requirement. Due t transmissin security cnsideratins n the PJM system, it is smetimes necessary t carry a minimum amunt f synchrnized reserve in specific sub-znes in PJM such that lading 100% synchrnized reserve will nt result in an verlad f any f the PJM transfer interfaces. The Mid-Atlantic Sub-Zne is defined in the Synchrnized Reserve Market t ensure that reserves are available in r deliverable t the eastern part f the system under cnstrained cnditins. The Mid-Atlantic Sub-Zne is defined by the mst limiting mnitred transfer interfaces. The interface mdeled in SPREGO may be revised by PJM t match peratin and meet the system reliability needs. Certain tplgy cnfiguratins n the system may result in single cntingencies that exceed what was previusly defined as the Synchrnized Reserve Requirement. During these perids, PJM may increase the Synchrnized Reserve Requirement t accmmdate the larger single cntingency. Under mst cnditins, the increased Synchrnized Reserve Requirement will be 75% f the larger single cntingency during the ff-peak perid ( ) and 100% f the larger single cntingency during the n-peak perid ( ). This value may be further adjusted by PJM t meet the system reliability needs Synchrnized Reserve Obligatin Fulfillment Each Lad Serving Entity (LSE) n the PJM system incurs a synchrnized reserve bligatin in kwh based n their real-time lad rati share and the Synchrnized Reserve Zne ttal assigned MW. During hurs when the Synchrnized Reserve Market Clearing Price (SRMCP) is the same thrughut the Synchrnized Reserve Zne, an LSE s synchrnized reserve bligatin is equal t its lad rati share times the amunt f synchrnized reserve assigned fr the Synchrnized Reserve Zne. During hurs when cngestin causes Synchrnized Reserve Market Clearing Prices (SRMCP) t separate each LSE s bligatin is equal t its lad rati share within its sub-zne times the amunt f synchrnized reserve assigned in that subzne. Any PJM market participant may incur r fulfill a synchrnized reserve bligatin thrugh the executin f a bilateral synchrnized reserve transactin as described belw. Participants may fulfill their synchrnized reserve bligatins by: PJM

72 Sectin 4: Overview f the PJM Synchrnized Reserve Market Owning Tier 1 resurces frm which the Synchrnized Reserve Zne btains synchrnized reserve; Self-scheduling wned Tier 2 resurces; Entering bilateral arrangements with ther market participants; r Purchasing synchrnized reserves frm the market Synchrnized Reserve Offer Perid Synchrnized Reserve ffer prices fr Tier 2 resurces and Synchrnized Reserve Ramp Rates are lcked as f 1800 hurs n the day prceeding the perating day. All resurces listed as available fr Tier 2 synchrnized reserve with n ffer price have their ffer prices set t zer. The fllwing infrmatin may be submitted and/r changed up until 60 minutes prir t the start f the perating hur, at which time the Synchrnized Reserve Market clses: Synchrnized Reserve Availability fr Tier 2 resurces Synchrnized Reserve Offer Quantity (MW) Synchrnized Reserve Maximum (This parameter is called Spin Max n the emkt Synchrnized Reserve Hurly Updates screen) In general, generatin wners may nt self-schedule synchrnized reserve resurces after 60 minutes prir t the perating hur when the Synchrnized Reserve Market clses. Hwever, the fllwing exceptins exist: if a generatin wner has a resurce that was either self-scheduled r pl-assigned t prvide Tier 2 Synchrnized Reserve and subsequent t either being self-scheduled r assigned that resurce becmes unavailable t prvide such amunt f Synchrnized Reserve, the generatin wner has the ptin f self-scheduling anther resurce in rder t make up the shrtfall. Als, a resurce that was unavailable fr energy and therefre nt evaluated as part f the Synchrnized Reserve Market clearing becmes available during the perating hur, that resurce may be self-scheduled t prvide Synchrnized Reserve at that time Bilateral Synchrnized Reserve Transactins Bilateral synchrnized reserve transactins may be reprted t PJM. Such reprted bilateral synchrnized reserve transactins must be fr the physical transfer f synchrnized reserve and must be reprted by the buyer and subsequently cnfirmed by the seller thrugh the emkt System n later than 16:00 the day after the transactin starts. Bilateral transactins that have been reprted and cnfirmed may nt be changed; they must be deleted and re-reprted. Deletin f a reprted bilateral transactin after its start time has passed will result in a change in the end time f the transactin t the current hur. PJM

73 Sectin 4: Overview f the PJM Synchrnized Reserve Market Bilateral synchrnized reserve transactins reprted t PJM may be entered either in MW r as a percentage f the purchaser s bligatin. Participants will als be required t indicate the reserve zne fr which the transactin is applicable. Payments and related charges assciated with the bilateral synchrnized reserve transactins reprted t PJM shall be arranged between the parties t the bilateral cntract. A buyer under a bilateral synchrnized reserve transactin reprted t PJM agrees that it guarantees and indemnifies PJM, PJM Settlement, and the market participants fr the csts f any purchases by the seller in the Synchrnized Reserve Market, as determined by PJM, t supply the reprted bilateral transactin and fr which payment is nt made t PJM Settlement by the seller. Upn any default in bligatins t PJM r PJM Settlement by a Market Participant, PJM shall nt accept any new bilateral reprting by the Market Participant and shall terminate all f the market participant s reprting f emarkets schedules assciated with its bilateral synchrnized reserve transactins previusly reprted t PJM fr all days where delivery had nt yet ccurred. PJM calculates and psts Synchrnized Reserve Zne preliminary billing data n which market participants can use as a resurce fr pricing bilateral synchrnized reserve transactins. The infrmatin can be fund n the pjm website at Synchrnized Reserve Market Clearing PJM clears the synchrnized reserve market n an hurly basis. The fllwing is the timeline by which this hurly clearing is accmplished: 90 minutes prir t the start f each hur, PJM psts the estimates fr the amunt f Tier 1 synchrnized reserve that will be available n each resurce. PJM psts this infrmatin n the emkt System such that each generatin wner is able t view the Tier 1 assigned fr each f the wner s resurces. 60 minutes prir t the start f each hur, each generatin wner is required t identify thse resurces that are t be self-scheduled t prvide synchrnized reserve and fr what quantity, if this infrmatin has changed frm the previus hur. 30 minutes prir t the start f each hur, PJM re-estimates the amunt f Tier 1 synchrnized reserve available n each resurce simultaneusly clears the synchrnized reserve and regulatin markets, and psts regulatin market clearing prices, synchrnized reserve market clearing prices and Tier 2 assignments, based n the remaining requirement nt met by Tier 1 and selfscheduled Tier 2. If the available Tier 1 is sufficient t meet the synchrnized reserve requirement, self-scheduled Tier 2 ffers will nt clear, n Tier 2 will be assigned, and the Tier 2 clearing price will be zer. If Tier 1 and self-scheduled Tier 2 resurces are sufficient t meet the synchrnized reserve requirement, the PJM

74 Sectin 4: Overview f the PJM Synchrnized Reserve Market Tier 2 clearing price is zer and n Tier 2 pl-scheduled assignments are made (Tier 2 self-scheduled resurces are cmmitted and bligated t respnd t a synchrnized reserve event). If the available Tier 1 and self-scheduled Tier 2 are nt sufficient t meet the requirement, the Tier 2 clearing price is set equal t the merit rder price f the highest cst Tier 2 resurce necessary t meet the remaining requirement. Shuld regulatin and synchrnized reserve capacity be insufficient t meet bth requirements, regulatin will receive the higher pririty in the market clearing. Resurce merit rder price ($/MWh) = Resurce synchrnized reserve ffer + estimated resurce pprtunity cst per MWh f capability + energy use per MWh f capability The resurce synchrnized reserve ffer is that which is submitted by the wner via the emkt System by 1800 hurs n the day preceding the perating day. Estimated resurce pprtunity cst fr cndensing CTs is calculated as fllws: O.C.= [psitive (frecast LMP energy ffer price)] x MW capability / synchrnized reserve capability Estimated resurce pprtunity cst fr nn-cndensing resurces is calculated as fllws: LMP is the frecasted hurly LMP at the generatr bus, O.C. = LMP ED x GENOFF, where: ED is the price assciated with the setpint the resurce must maintain t prvide its assigned amunt f synchrnized reserve, and GENOFF is the MW amunt f synchrnized prvided. This frmula is smewhat simplistic. The actual calculatin is an integratin that may be visualized as the area n a graph enclsed by the resurce s price curve, the pints n that curve crrespnding t the resurce s desired ecnmic dispatch and the setpint necessary t prvide the assigned amunt f synchrnized reserve, and the LMP. Energy use fr each cndensing resurce is entered in MW by the wner via the emkt System as part f the synchrnized reserve ffer. Estimated energy use is calculated as part f the merit rder price as fllws: E.U. = frecast LMP x energy use MW / synchrnized reserve capability Fr each f these calculatins, frecast LMP is the result f the 1-hur lk-ahead prvided by the Unit Dispatch Tl. Energy resurces fr which an energy ffer is nt submitted will be ineligible fr pprtunity cst credit. The pprtunity cst fr a Demand Resurce is zer. PJM

75 Sectin 4: Overview f the PJM Synchrnized Reserve Market PJM may call n resurces nt therwise scheduled t run in rder t prvide synchrnized reserve, in accrdance with PJM's bligatin t minimize the ttal cst f energy, perating reserves, regulatin, and ther ancillary services. If a resurce is called n by PJM fr the purpse f prviding synchrnized reserve, the resurce is guaranteed recvery f synchrnized reserve lst pprtunity csts as well as start-up, n-lad and energy csts. Please refer t Manual 28: Operating Agreement Accunting fr additinal settlements details. Due t transmissin cnsideratins n the PJM system, it is smetimes necessary t carry a minimum amunt f synchrnized reserve in specific areas in PJM such that lading 100% synchrnized reserve will nt result in an verlad f any f the PJM transfer interfaces. The gal is t minimize the cst f synchrnized reserve such that given current system cnditins, the flw n binding transmissin cnstraints is nt increased after a synchrnized reserve event is initiated and the assciated respnse is achieved. Therefre, PJM clears the Tier 2 market based n this lcatinal synchrnized reserve requirement and calculates sub-znal Tier 2 clearing prices. Whenever the lcatinal synchrnized reserve cnstraint is nt binding, the clearing prices are equal. Hwever, when mre synchrnized reserve is required in a given area than wuld have been assigned withut this requirement, the clearing prices will separate. Resurces will be identified and receive the applicable clearing price based n their lcatin with respect t the binding cnstraint(s). That is, resurces fr which synchrnized reserve respnse wuld help the cnstraint will receive the higher clearing price, whereas resurces fr which synchrnized reserve respnse wuld aggravate the cnstraint will receive the lwer clearing price. Analysis t determine the lcatin f generatin and lad buses with respect t the binding cnstraint is perfrmed with each quarterly netwrk mdel update. The Mid- Atlantic sub-zne list resulting frm this analysis can be fund n the PJM Web site at: The hurly Tier 2 clearing prices are psted n the emkt user interface fr public view. If n Synchrnized Reserve Market Results are psted t the emkt MUI fr an hur, PJM will cntinue the current assignments, as needed, int the un-psted hur and the SRMCP frm the previus hur will be used fr settlement Hydr Units Hydr units cndensing t prvide synchrnized reserve during times when they were nt scheduled t generate incur n pprtunity cst. There may r may nt be an energy use cmpnent, as indicated by the wner as part f the synchrnized reserve ffer. If a hydr unit is held ff line r reduced t prvide synchrnized reserve during a time when it was scheduled t generate, it will incur pprtunity cst. Since hydr units perate n a schedule and d nt have an energy bid, pprtunity cst fr these units is calculated as fllws: The frmula is the same as that shwn under Synchrnized Reserve Market Clearing, O.C. = LMP ED x GENOFF, except the ED value is the average value PJM

76 Sectin 4: Overview f the PJM Synchrnized Reserve Market f the LMP at the hydr unit bus fr the apprpriate n-peak ( ) r ffpeak ( , )perid, excluding thse hurs during which all available units at the hydr plant were perating. Day-ahead values are used fr the purpses f assigning Tier 2 resurces, and actual LMPs are used in the after-thefact settlement. If the average LMP value is higher than the actual LMP at the generatr bus, the pprtunity cst is zer. During thse hurs when a hydr unit is in spill, the ED value is set t zer such that the pprtunity cst is based n the full value f LMP. During the perating day, the perating cmpany is respnsible fr cmmunicating this cnditin n the Regulatin Hurly Updates page in the emkt System. When determined t be ecnmically beneficial, PJM maintains the authrity t adjust hydr unit schedules fr thse units scheduled by the wner if the wner has als submitted a synchrnized reserve ffer fr thse units and made the units available fr spin Demand Resurces Demand Resurces prviding Synchrnized Reserve are required t prvide metering infrmatin at n less than a ne minute scan surrunding a synchrnized reserve event. Metering infrmatin fr demand resurces is nt required t be sent t PJM in real time. Daily uplads at the clse f the next business day after the perating day, if an event has ccurred are sufficient. Demand Resurces are limited t prviding 25% f the Synchrnized Reserve requirement. Demand Resurces that are cnsidered t be batch lad resurces are limited t prviding 20% f the Synchrnized Reserve requirement. If PJM determines that satisfying 20 percent f the Synchrnized Reserve requirement frm Batch Lad Demand Resurces is causing r may cause a reliability degradatin, PJM may reduce the percentage f the requirement that may be satisfied by Batch Lad Demand Resurces in any hur t as lw as 10 percent. Demand Resurces must cmplete initial and cntinuing training n Regulatin and Synchrnized Reserve Markets as dcumented in Manual 40: Certificatin and Training Requirements, Sectin 2.6: Training Requirements fr Demand Respnse Resurces Supplying Regulatin and Synchrnized Reserve Synchrnized Reserve Market Operatins The PJM Operatr maintains the ttal Synchrnized Reserve Zne Capability equal t the Synchrnized Reserve Zne synchrnized reserve requirement. The PJM Operatr evaluates the set f resurces prviding synchrnized reserve n an hurly basis, and assigns the mst cst-effective set f Tier 2 resurces necessary t fulfill the requirement. PJM

77 Sectin 4: Overview f the PJM Synchrnized Reserve Market The hurly Tier 2 clearing price is fixed nce calculated and psted. Any pprtunity cst r energy use that exceeds the clearing price is credited after-the-fact n a resurce-specific basis. The PJM Operatr cmmunicates Tier 2 cndenser assignments t individual Lcal Cntrl Centers via telephne Settlements Please refer t Manual 28: Operating Agreement Accunting, Sectin 6: Synchrnized Reserve Accunting fr settlement details. Synchrnized Reserve settlement is a zer-sum calculatin based n the synchrnized reserve prvided t the market by generatin wners and purchased frm the market by participants. Tier 1 credits will be awarded t each eligible resurce fr respnse up t 110% f the resurce s capability based n the synchrnized reserve ramp rate(s) submitted by the resurce s wner day-ahead. Credits t individual resurces may be awarded fr respnse greater than 110% f stated capability if ther Tier 1 resurces underrespnd. Credits fr respnse in excess f 110% f capability will be awarded n a pr-rata basis such that the aggregate Tier 1 credits awarded d nt exceed 110% f the ttal pssible credits based n the aggregate capability f all eligible Tier 1 resurces. Resurces prviding regulatin at the initiatin f a synchrnized reserve event will be cmpensated fr Tier 1 respnse. Tier 1 respnse is calculated accrding t the fllwing frmula: Final Output is the resurce s greatest telemetered utput between 9 and 11 minutes after synchrnized reserve event is initiated Initial Output is the resurce s lwest telemetered utput between 1 minute befre and 1 minute after synchrnized reserve event is initiated RegMW is the resurce s assigned amunt f regulatin max 0, integrated Output - min EcMax, RegHighLimit min EcMax, RegHighLimit, Output - max 0, integrated Initial Output -2 RegMW, where : As a result f this frmula, resurces that are assigned regulatin when a synchrnized reserve event is initiated will be cmpensated based n the amunt f respnse prvided beynd their regulatin cmmitment, as well as fr any respnse in excess f their regulatin high limit r ecnmic maximum (whichever is lwer.) A resurce s regulatin maximum cmmitment will be defined as the resurce s full regulating range (i.e. twice the amunt f assigned regulatin.) Tier 2 synchrnized reserve credits are awarded t generatin wners that have either self-scheduled synchrnized reserve r sld synchrnized reserve int the PJM

78 Sectin 4: Overview f the PJM Synchrnized Reserve Market market. Synchrnized reserve credits fr resurces self-scheduled t prvide synchrnized reserve are equal t Tier 2 clearing price times the resurce s selfscheduled synchrnized reserve capability. Synchrnized reserve credits fr resurces that are pl-scheduled t prvide synchrnized reserve are the higher f: Tier 2 clearing price times the resurce s assigned synchrnized reserve capability, r The resurce s synchrnized reserve ffer times its assigned synchrnized reserve capability plus pprtunity cst and/r energy use incurred. Opprtunity cst and energy use are calculated as shwn abve in Market Clearing using actual integrated LMP as ppsed t that which was frecasted. Resurces that are pl-assigned Tier 2 synchrnized reserve (and actual MWh are less than day-ahead scheduled MWh) and Tier 1 resurces that respnd t a synchrnized reserve event are therefre exempt frm deviatins fr the purpse f accumulating perating reserves charges fr the hurs during which the Tier 2 assignment r Tier 1 respnse is effective Verificatin The magnitude f each resurce s respnse t a synchrnized reserve event (bth Tier 1 and Tier 2) is the difference between the resurce s utput at the start f the event and its utput ten minutes after the start f the event. In rder t allw fr small fluctuatins and pssible telemetry delays, resurce utput at the start f the event is defined as the lwest telemetered utput between ne (1) minute prir t and ne (1) minute fllwing the start f the event. Similarly, a resurce s utput ten minutes after the event is defined as the greatest utput achieved between nine (9) and eleven (11) minutes after the start f the event. All resurces (bth Tier 1 and Tier 2) must maintain an utput level greater than r equal t that which was achieved as f ten minutes after the event fr the duratin f the event r thirty (30) minutes frm the start f the event, whichever is shrter. The respnse actually credited t a given resurces will be reduced by the amunt the MW utput f that resurce falls belw the level achieved after ten (10) minutes by either the end f the event r after 30 minutes frm the start f the event, whichever is shrter. Fr demand resurces that are cnsidered batch lad resurces, a secnd methd f verificatin will be used fr instances where a synchrnized reserve event is initiated and the resurce is perating at the minimum cnsumptin level f its duty cycle. In this case, the magnitude f the respnse will be measured as the difference between (a) the resurce s cnsumptin at the end f the event and (b) the maximum cnsumptin within a ten (10) minute perid fllwing the event prvided that all subsequent minutes fllwing that minute are n less than 50% f the cnsumptin in that minute Nn-Perfrmance There is n cnsequence fr a Tier 1 resurce that des nt respnd with the amunt f synchrnized reserve that was expected f it in respnse t a PJM

79 Manual 11: Energy & Ancillary Services Market Operatins Sectin 4: Overview f the PJM Synchrnized Reserve Market synchrnized reserve event. Tier 1 resurces are simply credited fr the amunt f respnse they prvide. Since Tier 2 resurces are credited with a capacity payment any time they are expected t be ready t respnd t a synchrnized reserve event, failure t prvide that respnse results in an bligatin t repay that credit fllwing instances f nnperfrmance. The fllwing cnsequences exist fr a Tier 2 resurce that des nt respnd with its assigned amunt f synchrnized reserve: The resurce is credited fr Tier 2 synchrnized reserve capacity in the amunt that actually respnded fr the cntiguus hurs the resurce was assigned Tier 2 synchrnized reserve during which the event ccurred, and; The wner f the resurce incurs a synchrnized reserve bligatin in the amunt f the shrtfall fr the three (3), cnsecutive, same-peak days ccurring at least three (3) business days fllwing the event. Off-peak days are defined as weekends and PJM hlidays, and n-peak days are all thers. Owners f assigned Tier 2 resurces will be permitted t demnstrate aggregate respnse, such that the ttal respnse frm all assigned resurces must be greater than r equal t the ttal assigned amunt f synchrnized reserve. This aggregate respnse will be used when determining the wner s additinal bligatin. In cases where a synchrnized reserve event lasts less than 10 minutes, Tier 2 resurces are credited with the amunt f synchrnized reserve capacity they are assigned. Tier 1 resurces are credited with the amunt f respnse prvided ver the length f the event, as determined via measurement parallel t that which is described abve in the Verificatin sectin. That is, the utput f each resurce at the start f the event is defined as the lwest telemetered utput between ne (1) minute prir t the start f the event and ne (1) minute after the start f the event, and the utput at the end f the event is defined as the greatest telemetered utput between ne (1) minute prir t the end f the event and ne (1) minute fllwing the end f the event. PJM

80 Sectin 5: Market Clearing Prcesses and Tls Sectin 5: Market Clearing Prcesses and Tls Welcme t the Market Clearing Prcesses and Tls sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: A descriptin f the PJM scheduling philsphy (see PJM Philsphy ). A descriptin f the tls that are used during the scheduling prcess (see Scheduling Tls ). 5.1 PJM Philsphy The PJM scheduling philsphy in the Day-ahead Energy Market is t schedule generatin t meet the aggregate Demand bids that results in the least-priced generatin mix, while maintaining the reliability f the PJM RTO. PJM will als schedule additinal resurces as needed t satisfy the PJM Lad Frecast and the additinal Day-ahead Scheduling Reserve (Operating Reserve) Objective based n minimizing the cst t prcure such reserves. PJM will als schedule resurces based n ecnmics t cntrl ptential transmissin limitatins that are binding in the Transmissin Reliability analysis that is perfrmed in parallel with and subsequent t the Day-ahead Market analysis. The scheduling prcess evaluates the price f each available resurce cmpared with every ther available generating resurce. The philsphy fr scheduling the PJM RTO requires: Scheduling sufficient generatin in the Day-ahead Energy Market t cver aggregate Demand bids and Day-ahead Scheduling Reserve (Operating Reserve) requirements calculated as a functin f such demand bids Scheduling sufficient generatin in the reliability-based analysis subsequent t the Day-ahead Energy Market t cver the PJM Lad Frecast and additinal Dayahead Scheduling Reserve (Operating Reserve) requirements Scheduling sufficient generatin t cntrl ptential transmissin limitatins that are binding in the Transmissin Reliability analysis Scheduling sufficient generatin t satisfy the PJM Regulatin Requirement, PJM Synchrnized Reserve Requirement, and ther ancillary service requirements f the PJM RTO. Ensuring PJM Members participate in the analysis and eliminatin f cnditins that threaten the reliable peratin f the PJM RTO Scheduling f resurces by PJM is perfrmed ecnmically n the basis f the prices and perating characteristics ffered by the Market Sellers, using security, cnstrained dispatch and cntinuing until sufficient generatin is dispatched in each hur t serve all energy purchase requirements, as well as the PJM RTO requirements. PJM

81 Sectin 5: Market Clearing Prcesses and Tls 5.2 Scheduling Tls Analytical scheduling tls exist t assist PJM with the scheduling prcess. These tls permit PJM scheduling staff t analyze numerus scheduling scenaris. PJM persnnel use several tls t assist in scheduling the resurces fr shrt-term and hurly activities. The scheduling tls include: PJM Enhanced Energy Scheduler (EES) PJM eschedules Lad Frecasting Algrithms emkt and Market Database System Unit Dispatch System (UDS) Hydr Calculatr Energy Market Technical Sftware (RSC, SPD and SFT) PJM Ancillary Service Optimizer (ASO) Transmissin Outage Data System Tgether these tls recgnize the fllwing cnditins: Reactive limits Resurce cnstraints Unscheduled pwer flws Inter-area transfer limits Resurce distributin factrs Self-Scheduled Resurces Limited fuel resurces Bilateral Transactins Hydrlgical cnstraints Generatin requirements Reserve requirements Enhanced Energy Scheduler (EES) The EES prgram recrds and manages the interchange f bulk pwer between the PJM RTO and ther utilities, marketers, and brkers. PJM persnnel use EES t prcess daily nn-firm (bth thse electing t curtail due t cngestin and thse electing t pay cngestin charges) and firm Bilateral Transactin schedules that are submitted by PJM Members. In general, EES is used t perfrm the fllwing activities: Prcesses PJM Members Bilateral Transactins PJM

82 Sectin 5: Market Clearing Prcesses and Tls Validates transactin by verifying transactin rules Bilateral transactins that are reprted t PJM must be fr the physical transfer f electric energy. Payments and related charges assciated with such bilateral electric energy transactins reprted t PJM shall be arranged between the parties t the bilateral transactin. A buyer under a bilateral transactin reprted t PJM agrees that it guarantees and indemnifies PJM, PJM Settlement, and the market participants fr the csts f any Spt Market Backup, as determined by PJM, t supply the reprted bilateral transactin and fr which payment is nt made t PJM Settlement by the seller. Upn any default in bligatins t PJM r PJM Settlement by a Market Participant, PJM shall nt accept any new bilateral transactin reprting by the Market Participant and shall terminate all f the market participant s reprting f assciated with its bilateral transactins previusly reprted t PJM fr all days where delivery had nt yet ccurred PJM eschedules PJM eschedules is an Internet applicatin that is used, amng ther functins, t reprt internal Bilateral Transactins Lad Frecasting PJM scheduling staff requires lad frecasts fr up t ten days in the future. Fr each day, a 24-hur lad shape is needed. The first step in develping a lad frecast is t btain the weather infrmatin fr the time perid. Weather infrmatin is prvided t PJM at regular intervals by a cntracted-fr weather service. Additinal weather data surces include the Natinal Weather Service, radi news, LSE weather infrmatin, and existing lcal PJM RTO cnditins. The frecast perid is reviewed t determine any cnditins that culd affect the PJM RTO s lad, including: Day f week Hlidays Special events Daylight savings time changes Internal participant lad frecasts Peak lads and lad shapes are determined using a similar day s frecast. PJM retrieves the lad data frm a histrical file and adjusts the frecasts, as needed, t reflect grwth r ther discrepancies. Exhibit 2 presents the typical apprach PJM uses t frecast lad. PJM

83 Sectin 5: Market Clearing Prcesses and Tls Exhibit 2: Lad Frecasting Prcess The lad frecasts fr each 24-hur perid are input in the Marginal Scheduler prgram. PJM scheduling staff als psts these frecasts n the OASIS Markets Database System The Markets Database System is a tw-part system: The Markets Database stres the basic resurce data supplied by the PJM Members, including perating limits and resurce availability. The emkt Web site that prvides the Internet-based user interface that allws Market participants t submit generatin ffer data, Demand bids, Increment Offers, Decrement bids and Regulatin Offers, Synchrnized Reserve Offers, int the Markets Database. The Markets Database is a very large database that cntains infrmatin n each generating resurce that perates as part f the PJM Energy Market, Demand Infrmatin, Increment Offers, Decrement Bids, Regulatin Offers, Synchrnized Reserve Offers, Dayahead Energy Market results, Day-ahead Scheduling Reserve Market Clearing Prices, Regulatin Market Clearing Prices and Synchrnized Reserve Market Clearing Prices. A descriptin f the Markets Database can be fund in the Markets Database Dictinary ( Market participants may access the Markets Database by using the PJM emkt Web site via the Internet using manual entry r bulk uplad/dwnlad via XML frmat. PJM

84 Sectin 5: Market Clearing Prcesses and Tls Please refer t Exhibit 3: Energy Market Daily Timeline. Exhibit 3: Synchrnized Reserve and Regulatin Market Daily Timeline PJM

85 Sectin 5: Market Clearing Prcesses and Tls Please refer t Exhibit 4: Synchrnized Reserve and Regulatin Market Hurly Timeline. PJM clears the synchrnized reserve and regulatin markets n an hurly basis. The fllwing is the timeline by which this hurly clearing is accmplished: 90 minutes prir t the start f each hur, PJM estimates the amunt f Tier 1 synchrnized reserve that will be available n each resurce. PJM psts this infrmatin n emkt such that each generatin wner is able t view the Tier 1 assigned fr each f the wner s resurces. 60 minutes prir t the start f each hur, each generatin wner is required t identify thse resurces that are t be self-scheduled t prvide synchrnized reserve and fr what quantity, if this infrmatin has changed frm the previus hur. 30 minutes prir t the start f each hur, PJM re-estimates the amunt f Tier 1 synchrnized reserve available n each resurce simultaneusly clears the synchrnized reserve and regulatin markets, and psts regulatin market clearing prices, synchrnized reserve market clearing prices and Tier 2 assignments, based n the remaining requirement nt met by Tier 1 and selfscheduled Tier 2. If the available Tier 1 is sufficient t meet the synchrnized reserve requirement, self-scheduled Tier 2 ffers will nt clear, n Tier 2 will be assigned, and the Tier 2 clearing price will be zer. If Tier 1 and self-scheduled Tier 2 resurces are sufficient t meet the synchrnized reserve requirement, the Tier 2 clearing price is zer and n Tier 2 pl-scheduled assignments are made (Tier 2 self-scheduled resurces are cmmitted and bligated t respnd t a synchrnized reserve event). If the available Tier 1 and self-scheduled Tier 2 are nt sufficient t meet the requirement, the Tier 2 clearing price is set equal t the merit rder price f the highest cst Tier 2 resurce necessary t meet the remaining requirement. Shuld regulatin and synchrnized reserve capacity be insufficient t meet bth requirements, regulatin will receive the higher pririty in the market clearing. Exhibit 4: Synchrnized Reserve and Regulatin Market Hurly Timeline PJM

86 Sectin 5: Market Clearing Prcesses and Tls The data that needs t be submitted by PJM Members t participate in the Day-ahead Energy, Synchrnized Reserve, and Regulatin Markets is described in detail in the Markets Database Dictinary ( Hydr Calculatr Fr PJM RTO-Scheduled Resurces, PJM is respnsible fr develping the schedules fr the run-f-river and pumped strage plants lcated within the PJM RTO and turned ver t PJM fr crdinatin. T assure hydraulic crdinatin f the hydr plants, PJM uses a cmputer prgram called the Hydr Calculatr. The Hydr Calculatr cmputes hurly reservir elevatins and plant generatin frm input river flws and plant discharges. PJM scheduling staff uses the Hydr Calculatr t cncentrate n ecnmic placement f available hydr energy PJM Energy Market Technical Sftware The PJM Energy Market Technical Sftware is a set f cmputer prgrams, which perfrms a security-cnstrained resurce cmmitment and ecnmic dispatch fr the Day-ahead Market. The individual prgrams are: Resurce Scheduling & Cmmitment (RSC) Perfrms security-cnstrained resurce cmmitment based n generatin ffers, demand bids, Day-ahead Scheduling Reserve Offers, Increment Offers, Decrement bids and transactin schedules submitted by participants and based n PJM RTO reliability requirements. RSC will enfrce physical resurce specific cnstraints that are specified in the generatin ffer data and generic transmissin cnstraints that are entered by the Market Operatr. RSC prvides an ptimized ecnmic resurce cmmitment schedule fr the next seven days and it utilizes a Mixed Integer linear prgramming slver t create an initial resurce dispatch fr the next perating day. Scheduling, Pricing, & Dispatch (SPD) Perfrms security-cnstrained ecnmic dispatch using the cmmitment prfile prduced by RSC. SPD calculates hurly resurce generatin MW levels, LMPs and Day-ahead Scheduling Reserve Clearing Prices fr all lad and generatin buses fr each hur f the next perating day. SPD utilizes a linear prgramming slver t develp the ecnmic dispatch slutin while respecting generic transmissin cnstraints that affect dispatch, such as reactive interface limits, and thermal limits. Simultaneus Feasibility Test (SFT) SFT perfrms AC cntingency analysis using cntingency list frm PJM EMS and creates generic cnstraints equatins based n any vilatins that are detected. These generic cnstraints equatins are then passed them back t SPD fr reslutin. SFT ensures that the Day-ahead Market results are physically feasible cnsidering PJM RTO security cnstraints and reliability requirements. PJM

87 Sectin 5: Market Clearing Prcesses and Tls UDS/DMT Exhibit 5: Settlement Subsystems The Energy Market technical sftware develps the Day-ahead Market results based n minimizing prductin cst f energy and reserve t meet the Demand bids and Decrement bids that are submitted int the Day-ahead Market while respecting the PJM RTO security cnstraints and reliability requirements that are necessary fr the reliable peratin f the PJM RTO. Subsequent t the clse f the generatin Re-bidding Perid at 6:00 PM, the RSC is the primary tl used t determine any change in steam resurce cmmitment status based n minimizing the additinal startup csts and csts t perate steam resurces at ecnmic minimum in rder t prvide sufficient perating reserves t satisfy the PJM Lad Frecast (if greater that cleared ttal demand in the Day-ahead Market) and adjusted Day-ahead Scheduling Reserve (Operating Reserves) requirements. The purpse f this secnd phase f resurce cmmitment is t ensure that PJM has scheduled enugh generatin in advance t meet the PJM Lad Frecast fr the next perating day and fr the subsequent 6 days. CTs resurces are included in the scheduling prcess and are scheduled in the Day-ahead Market. Hwever, the decisins cncerning actual peratin f pl-scheduled CT resurces during the perating day are nt made until the current perating hur in real-time dispatch. PJM

88 Sectin 5: Market Clearing Prcesses and Tls Dwnlad Data frm Markets Database Exhibit 6: Dwnlad Data frm Markets Database Exhibit 7: Energy Market Data Flw PJM

89 Sectin 5: Market Clearing Prcesses and Tls Ancillary Service Optimizer (ASO) The ASO is the ancillary service ptimizer sftware. It uses the regulatin ffers, synchrnized reserve ffers, and cmmitment data t determine the regulatin market clearing prices (RMCCP and RMPCP) and synchrnized reserve market clearing price (SRMCP). It als determines a preliminary frecast f which resurces will prvide regulatin and synchrnized reserve. ASO perfrms regulatin and synchrnized reserve market dispatch t minimize the ttal cst f energy, regulatin and synchrnized reserve dispatch. Exhibit 8: Synchrnized Reserve and Regulatin Subsystems PJM

90 Sectin 6: Reserve Requirements in PJM Energy Markets Sectin 6: Reserve Requirements in PJM Energy Markets Welcme t the Reserve Requirements in PJM Energy Markets sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: A descriptin f the requirement/supply relatinship (see Frecasting PJM Generatin Requirement ). Hw PJM regulatin requirements are determined (see PJM Regulatin Requirements ). Hw PJM synchrnized reserve requirements are determined (see PJM Synchrnized Reserve Requirements ) Hw the marketing infrmatin is prcessed (see Prcessing Market Infrmatin ). Scheduling bridges the gap between advance utage and market infrmatin (prescheduling) and real-time peratins (dispatching) f mnitred facilities. Details n the dispatching prcedures fr all facilities can be fund in PJM Manual 12 Dispatch Operatins. The gal f the PJM is t develp schedules that preserve the security f the PJM RTO n an unbiased basis fr all PJM Members. The scheduling prcess fr each day cnsists f the Day-ahead Energy Market and f the develpment Current Operating Plan (COP) based n reliability analysis that is perfrmed in parallel with and subsequent t the Day-ahead Energy Market clearing. 6.1 Frecasting PJM Generatin Requirement The first step in the scheduling prcess is t examine the relatinship between Day-ahead Demand Bids and Decrement Bids with and Generatin Offers and Increment Offer and t clear the Day-ahead Market based n these bids and ffers. In the reliability analysis that fllws the Day-ahead Market, the relatinship between PJM Lad Frecast requirement and generatin supply fr the Real-time Energy Market is cnsidered. Exhibit 9 illustrates the Real-time Market relatinships in the frm f a bar chart. PJM

91 Sectin 6: Reserve Requirements in PJM Energy Markets Exhibit 9 presents the fllwing infrmatin: Exhibit 9: Requirement Versus Resurce Supply The PJM requirement is represented by the bar n the left. The height f this bar is the ttal PJM capacity requirement in MW. The capacity requirement cnsists f tw cmpnents: Energy requirement, cnsisting f the PJM lad frecast plus External Transactin sales t External Cntrl Areas Day-ahead Scheduling Reserve (Operating Reserve) requirement The PJM resurce supply is represented by the bar n the right which cnsists f fur supply cmpnents: External Transactin purchases frm External Cntrl Areas Resurces that are self-scheduled by the PJM Members Resurces and capacity that has been bid int the Day-ahead Market and the Real-time Market and is scheduled by PJM t meet the energy and reserve requirement Additinal capacity t satisfy the Day-ahead Scheduling Reserve (Operating Reserve) requirement is cmmitted at the discretin f the PJM PJM

92 Sectin 6: Reserve Requirements in PJM Energy Markets The identity f the resurces that are self-scheduled r PJM RTO-scheduled is given by the market infrmatin cntained in the Markets Database as shwn in the Markets Database Dictinary ( The PJM RTO s lad frecast is described in Sectin 2 f this PJM Manual. The amunt f External Transactins as scheduled by the PJM Members is als cnsidered when establishing the amunt f generatin that must be scheduled. S far, we have nly discussed the basic requirement/supply relatinships. The details f hw we actually match the resurces with the crrespnding lads fr bth the Day-ahead Energy Market and the Real-time Energy Market are discussed in later subsectins PJM Regulatin Requirement The ttal PJM Regulatin Requirement fr the PJM RTO is determined in whle MW fr the n-peak ( and ff-peak ( ) perids each day. The PJM RTO n-peak Regulatin Requirement is described in Manual 12 Balance Operatins, Sectin Determining Regulatin Assignment. PJM Actins: The PJM actins that are perfrmed t clear the Regulatin Market by establishing the initial list f resurces t prvide regulatin fr the next On/Off-Peak Perid and by calculating the Regulatin Marginal Clearing Prices (RMCCP and RMPCP) are as fllws: PJM clears the Regulatin Market simultaneusly with the Synchrnized Reserve Market, and psts the results n later than 30 minutes prir t the start f the perating hur. The PJM Operatr maintains ttal PJM regulating capability within a 30MW bandwidth arund the Regulatin Requirement. The PJM Operatr peridically evaluates the set f resurces prviding regulatin, and makes any adjustments t regulatin assignments deemed necessary and apprpriate t minimize the verall cst f regulatin. In the event f a regulatin excess, the PJM dispatcher deselects resurces beginning with the highest cst resurce currently prviding regulatin and mving dwnward. In the event f a regulatin deficiency, the PJM dispatcher selects resurces t prvide regulatin beginning with the lwest cst resurce currently nt prviding regulatin and mving upward. The RMCP des nt change based upn regulating resurce adjustments made in real time. Any pprtunity csts that exceed the RMCP are credited after the fact n a resurce-specific basis. PJM

93 Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets The PJM Energy Management System (EMS) sends the RTO based Area Regulatin signal(s) t each Lcal Cntrl Center (LCC), as well as signals t individual resurces r plants as requested by the wner. The PJM Operatr cmmunicates any change in resurce regulating assignments t individual Lcal Cntrl Centers. Cmpany ttal in-service regulating capabilities are then telemetered back t the PJM EMS via the PJM data link. Resurce regulatin assignment changes during transitins between n-peak and ff-peak perids begin 30 minutes prir t the new perid, and are cmpleted n later than 30 minutes after the perid begins. Hurly participant Regulatin bligatins are determined after-the-fact, based n the LSE s actual lad ratis. Participants can estimate their share f the PJM Regulatin Requirement in advance by cmparing their hurly lad frecast t the PJM hurly lad frecasts prvided by the PJM. PJM Member Actins: PJM Members submit Individual Synchrnized Reserve and Regulatin ffer data fr each Resurce that is available t prvide synchrnized reserve and/r regulatin (fr generatin r demand resurces meeting the Regulatin quality standard and Synchrnized Reserve quality standard), differentiated as self-scheduled, External Transactin sale/purchase (identifying seller and buyer) and available fr PJM RTOscheduling. This infrmatin is maintained within the PJM emkt Web site and is passed t the PJM Ancillary Service Optimizer (ASO). Exhibit 10 summarizes this infrmatin. PJM

94 Sectin 6: Reserve Requirements in PJM Energy Markets Exhibit 10: Synchrnized & Regulatin Data Flw PJM Members update regulating resurce perating limits and availability in the PJM emkt Web site Regulatin Service PJM perates a bidding market fr Regulatin services in the PJM RTO. PJM Members that have generatin r demand resurces meeting the Regulatin quality standard may submit Regulatin ffer data fr each individual Resurce that is available t prvide regulatin. The ffer infrmatin is maintained within the PJM emkt Web site and is passed t the Ancillary Service Optimizer (ASO). Generatin wners wishing t sell regulatin service must supply a regulatin ffer price by 6:00 p.m. the day prir t peratin and is applicable fr the entire 24-hur perid fr which it is submitted. The remainder f the necessary data may be submitted r changed up until sixty (60) minutes prir t the perating hur, at which time the Regulatin market clses. PJM

95 Sectin 6: Reserve Requirements in PJM Energy Markets Exhibit 11 defines the Regulatin parameters f a qualified generating resurce. Ecnmic Max Assigned Regulatin Regulatin Max Energy Dispatch Range Energy Dispatch Range Withut Requirement With Regulatin Assigned Regulatin Regulatin Min Ecnmic Min Exhibit 11: Generatr Regulatin Service The PJM RTO s ttal available Regulatin service is calculated and cmpared with its requirements. Any significant shrtage is reprted t PJM dispatcher fr pssible actin. See the PJM Manual fr Balancing Operatins (M-12) fr a descriptin f the Regulatin allcatin prcess during the curse f system peratin. 6.2 PJM Synchrnized Reserve Requirements The ttal PJM Synchrnized Reserve Requirement fr each Synchrnized Reserve Zne is determined in whle MW fr each hur f the perating day. The RFC Synchrnized Reserve Zne Requirement is defined as that amunt f 10-minute reserve that must be synchrnized t the grid. The requirement will be defined as the greater f the ReliabilityFirst Crpratin (RFC) impsed minimum requirement r the largest cntingency n the system. The Suthern Synchrnized Reserve Zne Requirement is defined as the Dminin lad rati share f the largest system cntingency within VACAR, minus the available 15 minute quick start capability within the Suthern Synchrnized Reserve Zne. PJM

96 Sectin 6: Reserve Requirements in PJM Energy Markets PJM Actins: The PJM actins that are perfrmed t clear the Synchrnized Reserve Market by establishing the initial list f resurces t prvide Synchrnized Reserve fr the next perating day and by calculating the Synchrnized Reserve Marginal Clearing Prices (SRMCP) fr each hur as fllws: PJM clears the Synchrnized Reserve Market simultaneusly with the Regulatin Market, and psts the results n later than 30 minutes prir t the start f the perating hur The PJM Operatr maintains ttal Synchrnized Reserve Zne Capability equal t the Synchrnized Reserve Zne synchrnized reserve requirement. The PJM Operatr evaluates the set f resurces prviding synchrnized reserve n an hurly basis, and assigns the mst cst-effective set f Tier 2 resurces necessary t fulfill the requirement. The hurly Tier 2 clearing price is fixed nce calculated and psted. Any pprtunity cst r energy use that exceeds the clearing price is credited after-the-fact n a resurce-specific basis. The PJM Operatr cmmunicates Tier 2 cndenser assignments t individual Lcal Cntrl Centers via telephne. Hurly participant Synchrnized Reserve bligatins are determined after-the-fact, based n the LSE s actual lad ratis. Participants can estimate their share f the PJM Synchrnized Reserve Requirement in advance by cmparing their hurly lad frecast t the PJM hurly lad frecasts prvided by the PJM. PJM Member Actins: PJM Members submit Individual Synchrnized Reserve and Regulatin ffer data fr each Resurce that is available t prvide Synchrnized Reserve and/r regulatin (fr generatin r demand resurces meeting the Regulatin quality standard and Synchrnized Reserve quality standard), differentiated as self-scheduled, External Transactin sale/purchase (identifying seller and buyer) and available fr PJM RTOscheduling. This infrmatin is maintained within the PJM emkt website and is passed t the PJM Synchrnized Reserve & Regulatin Sftware (SPREGO). PJM Members update regulating resurce perating limits and availability in the PJM emkt Web site Synchrnized Reserve Service PJM perates a bidding market fr Synchrnized Reserve services in the PJM RTO. PJM Members that have resurces meeting the Synchrnized Reserve quality standard may submit Synchrnized Reserve ffer data fr each individual resurce that is available t prvide synchrnized reserve. The ffer infrmatin is maintained within the PJM emkt Web site and is passed t the Synchrnized Reserve and Regulatin Market sftware (SPREGO). Resurce wners wishing t sell synchrnized reserve r regulatin service PJM

97 Sectin 6: Reserve Requirements in PJM Energy Markets must supply an ffer price by 6:00 p.m. the day prir t peratin and is applicable fr the entire 24-hur perid fr which it is submitted. The remainder f the necessary data may be submitted r changed up until sixty (60) minutes prir t the perating hur, at which time the Regulatin and Synchrnized Reserve markets clse. 6.3 Prcessing Market Infrmatin Our attentin nw fcuses n the elements that make up the requirement and supply picture in bth the Day-ahead Energy Market and in the Real-time Energy Market. In the Day-ahead Energy Market, participants submit Demand bids, Demand Reductin Bids, Decrement Bids, Increment Offers and Generatin Offers int the Day-ahead Energy Market and PJM clears the Market based n these bids and ffers using least-cst security-cnstrained resurce cmmitment and dispatch PJM Member Lad Frecasts Each PJM Electric Distributin Cmpany (EDC) within the PJM RTO prvides PJM with a frecast f its requirements by nn n the day befre the Operating Day. Regardless f hw the PJM EDC s lad is supplied, the PJM EDC submits the fllwing Operating Day frecast infrmatin t the PJM: Midnight valley MW Mrning peak MW Afternn peak MW Evening peak MW The hurs fr which the frecasts apply are specified and changed peridically by PJM and cmmunicated t the PJM Members either electrnically r by facsimile. PJM cmpares the frecasts submitted by the PJM Members against the PJM RTO lad frecast which is develped by PJM. The PJM Members frecasts cver nly fur specified hurs, while the PJM RTO frecast is fr each hur f the Operating Day. Any significant discrepancies between the PJM Members frecasts and the crrespnding PJM RTO frecasts are reprted t PJM dispatcher. In general, the PJM RTO frecast takes precedence ver the aggregate f the individual PJM Members frecasts Reserve Service The Day-ahead Scheduling Reserve (Operating Reserve) bjective is a Cntrl Zne requirement (nt allcated t PJM Members individually). PJM schedules sufficient generating resurces t meet the PJM Day-ahead Scheduling Reserve (Operating Reserve) bjective as part f the Day-ahead Scheduling Reserve Market Clearing prcess. See the PJM Manual fr Pre-Scheduling Operatins (M-10) fr the detailed methdlgy fr determining Reserve Requirements. PJM

98 Sectin 6: Reserve Requirements in PJM Energy Markets Self-Scheduled Resurces PJM Members can chse t self-schedule their generatin in the Day-ahead Market r t Offer int the Day-ahead Market and allw PJM t schedule their generatin in the Dayahead Market. Subsequent t the Day-ahead Market, any generatr that was nt selected in the Day-ahead Market may chse t self-schedule. Anther ptin is t purchase generatin frm the market. The PJM Members scheduling chice is dependent n their scheduling philsphy Deviatins frm Day-ahead Market fr Pl Scheduled Resurces If a generatin resurce has been scheduled in the Day-ahead Market and wishes t deviate frm that schedule (i.e. nt run), the generatin wner shuld cntact the PJM Scheduling Crdinatr t determine if this curse f actin is pssible. The PJM Scheduling Crdinatr will then: If the PJM Scheduling Crdinatr determines that the generatin resurce is nt needed fr reliability purpses fr the perating day, the generatin wner can decide nt t run the resurce and n frced utage will be incurred. The generatin wner will be respnsible fr all imbalance and perating reserve charges. If the PJM Scheduling Crdinatr determines that the resurce is needed fr reliability purpses, he/she will infrm the generatin wner. The generatin wner may still elect t nt run the resurce, but a frced utage fr the duratin f the scheduled peratin f the resurce will be generated. The generatin wner will be respnsible fr all imbalance and perating reserve charges. The guideline fr ntifying PJM f deviatins fr pl scheduled resurces will be the sum f the resurce s ntificatin time plus the time t start. If this sum ttals t zer, then the minimum ntificatin time will be 45 minutes prir t the scheduled peratin f the resurce. This allws PJM adequate time fr determining if the resurce is needed fr reliability Credits fr Cancellatin f Pl Scheduled Resurces At the end f each mnth, PJM calculates the credits due t each PJM Member fr plscheduled resurces that were selected t run as part f the reliability study, and that PJM canceled befre cming n-line. The cancellatin credit equals the actual csts incurred, capped at the apprpriate start-up cst as specified in the generating resurce s ffer data. Requests fr such credits must be submitted, in writing, t the PJM Manager f Market Settlement Operatins Department, within frty-five days f invice being received by participant fr the mnth in questin Resurce Specific Data Requirements Internal PJM Members Offer Data fr resurce specific ffers is submitted directly int the Markets Database via the emkt Web site. Exhibit 15 summarizes the data requirements fr PJM

99 Sectin 6: Reserve Requirements in PJM Energy Markets capacity and energy resurces. Exhibit 12: Capacity and Energy Resurce Data Requirements If ffer data fr a capacity resurce is nt submitted by 12:00 nn f the day befre the perating day, PJM uses the ffer data and resurce availability previusly entered int the Markets Database and cnsiders the data a binding ffer. Fr a mre detailed descriptin f the data, please see the PJM Markets Database Dictinary ( External Market Sellers An External Resurce is a generatin resurce that is lcated utside the metered bundaries f PJM. If an external resurce is qualified as a capacity resurce in PJM, then in accrdance with the PJM Tariff, all external resurces being ffered in as capacity resurces must bid int the PJM Day-ahead Market as generatin resurces. Fr an external resurce t be ffered as a unit resurce, a valid generatr ffer, which cnsists f a price-based schedule, is submitted in the emkt system and a valid energy schedule is submitted in the EES system. External Market sellers reprt the fllwing data fr resurce-specific ffers, reprted n the business day befre the next perating day, up t seven days in advance: Specific generatin resurce (the CCPPTTUUSS reference number and resurce name frm The Markets Database). This number is supplied by PJM t the PJM Member upn creatin f the resurce in the Markets Database. If the resurce is PJM

100 Manual 11: Energy & Ancillary Services Market Operatins Sectin 6: Reserve Requirements in PJM Energy Markets submitted at least 30 days befre the bid date, see the PJM Manual fr Pre- Scheduling Operatins (M-10). Minimum and maximum energy fr each hur Minimum and maximum generatin fr each hur Minimum and maximum run times Resurce availability fr each hur Availability f regulatin upper and lwer energy limits fr each hur Respnse and cnstraint data Whether r nt t use start-up and n-lad fees The Netwrk Custmer may request Netwrk External Designated transmissin service fr the delivery f a designated netwrk resurce. Requests fr service are subject t Available Transmissin Capability (ATC) and ther PJM Reginal Practices ( Energy Scheduling (EES and etag) Requirements: A valid NERC etag is required fr all hurs that the external resurce will be bid int PJM. The firm OASIS reservatin assigned t the external resurce shall be linked t the tag. The tag will als have a special exceptin attached in the frm f the Tken/Value pair: EXCEPTION / CAPBACK, and the tag will be subject t PJM interchange ramp limits Day-ahead Market between 1200 and 1600 As specified in the Energy Market Business Rules, Bidding and Operatins Timeline sectin, all bids must be received by 12:00 nn. Frm 12:00 nn t 4:00 p.m. (ET), the bids will be evaluated. Results will be psted in the emkt system at 4:00 p.m. (ET). External Capacity Participants will be required t check the emkt system t see if the bid has been accepted. Fr bids accepted in the Day-ahead Market, External Capacity Participants may submit adjustments t the hurly prfile f their tag in rder t avid balancing market MW deviatins Rebidding Perid between 1600 and 1800 If the unit is accepted in the Reliability Run, External Capacity Participants will be required t submit a NERC etag that matches the hurly energy prfile. If the bid is nt accepted in the Day-ahead Market the participant may chse t either mdify an already existing tag t zer (0) MW, r take n actin. If the participant wishes t schedule the resurce as a self-scheduled/must run unit they may chse t d s and must submit an etag. The participant must als ntify the PJM Generatin Dispatcher that the unit is being self-scheduled int PJM as a cntract. PJM

101 Sectin 6: Reserve Requirements in PJM Energy Markets Real Time Market If the bid is nt accepted in the Day-ahead Market r Reliability Market, but is requested during the perating day the Generatin Dispatcher will ntify the participant wh will then submit an etag t match the request. This tag will be subject t all scheduling timing requirements and PJM interchange ramp limits. PJM

102 Sectin 7: External Transactin Scheduling Sectin 7: External Transactin Scheduling Sectin Remved: Infrmatin regarding External Transactin Scheduling is cntained in Manual 41: Managing Interchange PJM

103 Sectin 8: Psting OASIS Infrmatin Sectin 8: Psting OASIS Infrmatin Sectin Remved: Infrmatin regarding Psting OASIS Infrmatin is cntained in Manual 4: PJM OASIS Operatin PJM

104 Sectin 9: Hurly Scheduling Sectin 9: Hurly Scheduling Welcme t the Hurly Scheduling sectin f the PJM Manual fr Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: Hw schedules may be adjusted n an hurly basis (see Hurly Scheduling Adjustments ). 9.1 Hurly Scheduling Adjustments During the curse f Bulk Electric System peratins, planned and unplanned events may cntinually ccur. This sectin discusses the prcess by which pre-planned perating schedules may be changed by PJM r PJM Members t reflect new cnditins. A PJM Member may adjust the schedule f a resurce under its dispatch cntrl (Self- Scheduled Resurce) n an hur-t-hur basis beginning at 2200 f the day befre the Operating Day under the fllwing cnditins: Subject t the right f PJM t schedule and dispatch Self-Scheduled Resurces in an Emergency Prvided that PJM is ntified nt later than 60 minutes prir t the hur in which the adjustment is t take effect The fllwing adjustments may be made: A PJM Member may self-schedule any f its resurce increments, including hydr pwer resurces nt previusly designated as Self-Scheduled Resurces and nt selected as a PJM RTO Scheduled Resurce A PJM Member may request the scheduling f a new Bilateral Transactin that uses nn-firm transmissin service A PJM Member may remve frm service a resurce increment, including a hydr pwer resurce that it had previusly designated as a Self-Scheduled Resurce, prvided that PJM has the ptin t schedule energy frm such resurce increment at the price ffered in the scheduling prcess, with n bligatin t pay any start-up fee An External Market Buyer may refuse delivery f sme r all f the energy it requested t purchase by ntifying PJM dispatcher f the adjustment in deliveries nt later than 20 minutes prir t the hur in which the adjustment is t take effect. Any such refusal f delivery shall be subject t nn-delivery charges as described in the PJM Manual fr Operating Agreement Accunting (M-28). PJM

105 Sectin 10: Overview f the Demand Resurce Participatin Sectin 10: Overview f the Demand Resurce Participatin Welcme t the Overview f the Demand Resurce Participatin sectin f the PJM Manual Energy & Ancillary Services Market Operatins. In this sectin yu will find the fllwing infrmatin: An verview descriptin f the Demand Resurce Participatin in the PJM Energy Market (see Demand Resurce Participatin ). A list f the Demand Resurce Registratin Requirements (see Demand Resurce Registratin Requirements ). A list f the Demand Resurce Energy Market Participatin (see Demand Resurce Energy Market Participatin ). A list f the Demand Resurce Metering and Settlement Data Requirements ( Demand Resurce Metering and Settlement Data Requirements ) Overview f Demand Resurce Participatin The integratin f Demand Respnse int the PJM Markets recgnizes the imprtance f lad respnse t a fully functining market as well as the affect f lad respnse n the reliability f the grid. The purpse f these rules is t enable Demand Resurces under the directin and cntrl f Curtailment Service Prviders t participate in the varius PJM markets. Curtailment Service Prviders (CSPs) are Members r Special Members f PJM that participate in the PJM Markets by causing Demand Resurces t reduce demand. PJM Emergency Lad Respnse enables Demand Resurces that reduce lad during emergency cnditins t receive payment fr thse reductins. Demand Resurces in the Energy Only Optin f Emergency Lad Respnse are defined as Demand Resurces that receive nly an energy payment fr reductins. Demand Resurces in Full Emergency Lad Respnse are defined as Demand Resurces that receive bth an energy payment fr reductins and a capacity payment. Demand Resurces in Capacity Only Optin f Emergency Lad Respnse are defined as Demand Resurces that receive nly a capacity payment fr reductin. PJM Ecnmic Lad Respnse enables Demand Resurces t respnd t PJM energy, synchrnized reserve, and/r day-ahead scheduling reserve prices by reducing cnsumptin and receiving a payment fr the reductin r fllwing PJM signal t reduce r increase lad if prviding regulatin services. The Day-ahead Optin will prvide a mechanism by which any qualified market participant may ffer Demand Resurces the pprtunity t reduce the lad they draw frm the PJM system in advance f real-time peratins and receive payments based n day-ahead LMP fr the reductins PJM

106 Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin The Real-time Optin will prvide a mechanism by which any qualified market participant may ffer Demand Resurces the pprtunity t cmmit t a reductin and receive payments based n real-time LMP fr the reductins. Energy Settlements shall be limited t demand reductins executed in respnse t the realtime and/r day-ahead LMP. Reductins that d nt meet these requirements will nt be eligible fr settlement. Examples f ineligible settlements include, but are nt limited t the fllwing: Settlements based n variable demand where the timing f the demand reductin supprting the settlement did nt change in direct respnse t the real-time and/r dayahead LMP Cnsecutive daily settlements that are the result f a change in nrmal demand patterns that are submitted t maintain a CBL that n lnger reflects the relevant end-use custmer s demand. Settlements based n On-Site Generatr data if the On-Site Generatin is nt supprting demand reductins executed in respnse t the real-time and/r day-ahead LMP Settlements based n demand reductins that are the result f peratinal changes between multiple end-use custmer sites in the PJM ftprint except that settlements based n such demand reductin shall be allwed if the demand reductin alleviates cngestin. PJM shall disallw settlements fr demand reductins that d nt meet the requirements set frth abve. If the CSP cntinues t submit settlements fr demand reductins that d nt meet the requirements set frth abve then PJM shall suspend the CSP s Energy Market activity and refer the matter t the FERC Office f Enfrcement Ecnmic Lad Respnse Participant Review Prcess PJM shall review the participatin f a CSP, EDC and/r LSE in the Energy Market under the fllwing circumstances: The CSPs registratins are disputed mre than 10% f the time by the relevant EDC r LSE. The CSP s settlements are disputed mre than 10% f the time by the relevant EDC r LSE. The CSP s settlements are denied by PJM mre than 10% f the time. PJM shall have 30 days t cnduct the required review. PJM may refer the matter t the PJM MMU and/r the FERC Office f Enfrcement if the review indicates the relevant CSP and/r EDC r LSE is engaging in activity that is incnsistent with the Ecnmic Lad Respnse rules. PJM

107 Sectin 10: Overview f the Demand Resurce Participatin 10.2 Demand Resurce Registratin Requirements Curtailment Service Prviders shall register Demand Resurces that chse t participate in the PJM Energy, Capacity, Synchrnized Reserve, Day Ahead Scheduling Reserve r Regulatin Market accrding t the rules and requirements set frth belw Curtailment Service Prviders The fllwing business rules apply t Curtailment Service Prviders: Prir t participating in the PJM Markets, Curtailment Service Prviders must cmplete a registratin in the apprpriate PJM esuite applicatin which identifies the specific lcatin(s) that will participate and their assciated lad reductin capability. Simultaneus registratin f a Demand Resurce by mre than ne Curtailment Service Prvider will nt be accepted by PJM unless the registratin by ne CSP is fr a Capacity Only ILR r Capacity Only DR resurce and the ther registratin is fr ecnmic participatin. In rder t register Demand Resurces all specific infrmatin as defined in the elrs User Guide shall be prvided. Demand Resurces may be registered simultaneusly as Ecnmic Lad Respnse Resurces and Emergency Lad Respnse Resurces s lng as they bid their ecnmic lad reductins in the Day-ahead Market, self schedule r ntify PJM that their demand resurces are dispatchable in Real Time. Demand Resurces may switch CSPs. The CSP registering the switching Demand Resurce shall prvide PJM with the name f the CSP that previusly registered the Demand Resurce. PJM will treat the switching as a new registratin and will request the CSP that previusly registered the Demand Resurce t terminate the previus registratin. PJM will deem the previus registratin terminated if the previus CSP des nt respnd within 10 business days. Terminatin f the previus registratin will be required fr acceptance f the switched registratin. N Demand Resurce will be eligible t reduce lad when the identity f the CSP is in dispute. In rder t accmmdate day-ahead lad respnse the switch will becme effective at 12:01 a.m. f the third business day after the previus registratin is terminated r deemed terminated by PJM. The previus registratin will remain active fr the sle purpse f settlement f lad reductins that ccurred befre the switch became effective. Demand Resurce intending t run an On-Site Generatr in supprt f lcal lad represents t PJM that it hlds all applicable envirnmental and use permits fr running thse generatrs by submitting a registratin. Cntinuing participatin will be deemed as a cntinuing representatin by the wner that each time its On-Site Generatr is run it cmplies with all applicable permits, including any emissins, runtime limit r ther cnstraint n plant peratins that may be impsed by such permits. T assist CSPs in btaining the electric usage infrmatin f the end-use custmer the fllwing Custmer Usage Infrmatin Authrizatin frm has been develped. PJM

108 Sectin 10: Overview f the Demand Resurce Participatin Custmer Usage Infrmatin Authrizatin fr PJM Lad Respnse Prgrams ( Authrizatin ), the end-use custmer, ( Custmer ) hereby authrizes, and, its electric distributin cmpany(ies) ( EDCs ), t release its electric usage infrmatin, including hurly r sub-hurly usage histry (kwh/kw), EDC lss factrs, and peak lad cntributin assignments fr the current delivery year and the upcming delivery year, if knwn, t, the curtail service prvider ( CSP ), which has been r may be retained by Custmer t act n its behalf in the PJM Lad Respnse Prgrams. Custmer s EDCs and end-use sites are identified n Attachment A-1 and A-2 heret, which are incrprated herein by reference. 1. Custmer s cntact infrmatin fr purpses f its participatin in the PJM Lad Respnse Prgrams is as fllws: Custmer Name: Cntact Persn: Mailing Address: City State Zip Cde PJM

109 Sectin 10: Overview f the Demand Resurce Participatin Telephne Number: Fax Number: Cntact Persn s Address: 2. Custmer hereby advises CSP that it deems the infrmatin btained pursuant t this Authrizatin t be cnfidential and therefre requests that such infrmatin nt be divulged t any third party, except as required t participate in the PJM Lad Respnse Prgrams. 3. This Authrizatin shall terminate as fllws (mark ONE f the ptins belw): This Authrizatin shall be perpetual and shall nt terminate unless written ntice is prvided t CSP at least days in advance. This Authrizatin shall autmatically terminate n, with n further ntice t CSP being required. 4. I understand that terminatin f this Authrizatin will nt affect any actin that CSP tk in reliance n this Authrizatin befre it autmatically terminated r befre CSP received Custmer s written ntice f terminatin. PJM

110 Sectin 10: Overview f the Demand Resurce Participatin 5. The undersigned affirms that he/she has authrity t execute this Authrizatin n behalf f Custmer. IN WITNESS WHEREOF, Custmer executes this Authrizatin t be effective as f the date written belw. Custmer: By: Print Name Title Signature Date PJM

111 Sectin 10: Overview f the Demand Resurce Participatin ATTACHMENT A 1 LIST OF SITES FOR WHICH EDC,, HAS AUTHORIZATION TO PROVIDE ELECTRIC USAGE INFORMATION TO CSP Accunt Number(s): Service Address: Accunt Number(s): Service Address: Accunt Number(s): Service Address: Accunt Number(s): Service Address: PJM

112 Sectin 10: Overview f the Demand Resurce Participatin PJM Activities The fllwing business rules apply t PJM activities: PJM will, if apprpriate, prpse an alternative CBL calculatin tgether with supprting analysis. The prcess fr determining the apprpriate CBL is set frth belw. PJM will cnfirm with the apprpriate Lad Serving Entity (LSE) and Electric Distributin Cmpany (EDC) whether the lad reductin is under ther cntractual bligatins. (The EDC and LSE have ten (10) business days t respnd r PJM assumes acceptance.) Other cntractual bligatins may nt preclude participatin, but may require special cnsideratin by PJM such that apprpriate settlements are made within the cnfines f the existing cntract. PJM will cnfirm with the custmer s LSE whether the Demand Resurce is served under day-ahead r real-time LMP-based cntract fr energy delivery. PJM will further verify the nature f the Demand Resurce s LMP-based cntract. An LMP-based cntract is defined as ne by which an end-use custmer has agreed t pay its LSE fr the physical delivery f energy accrding t the hurly value f the Lcatinal Marginal Price (LMP) as calculated by PJM. The bus, zne, aggregate, etc at which the LMP frms the basis fr the cntract is immaterial. The LMP n which the cntract is based can be either day ahead r real time, and is assumed t be sme multiple f the actual, calculated LMP. End-use custmers that have LMP-based cntracts under which they have agreed t pay their Lad Serving Entity (LSE) fr the physical delivery f energy accrding t the hurly value f the real-time LMP as calculated by PJM may participate in the Real-time Market as prvided fr under the Real-time Operatins sectin belw. PJM will verify the transmissin and generatin (retail rate) charges with the apprpriate LSE. PJM will verify whether r nt a Demand Resurce is subject t a Lad Management cntract. PJM will further verify the nature f the Demand Resurce s Lad Management cntract. If a Lad Respnse registratin is denied by an EDC r LSE because the Curtailment Service Prvider prvided an incrrect EDC Accunt Number, Zne, Aggregate r Retail Cntract Infrmatin; the Curtailment Service Prvider must submit t PJM a new registratin fr the Demand Resurce that includes the crrect EDC Accunt Number, Zne, Aggregate and Retail Cntract Infrmatin, unless the registratin is crrected by the EDC r LSE. If a Lad Respnse registratin r re-registratin is reviewed by an EDC r LSE and the EDC r LSE des nt believe that the standard CBL calculatin is apprpriate, then the EDC r LSE shall prvide a prpsed alternative CBL calculatin tgether with supprting analysis t PJM, the CSP, and the EDC r LSE respectively. The prcess fr determining the apprpriate CBL is set frth belw. PJM

113 Sectin 10: Overview f the Demand Resurce Participatin PJM will infrm the Curtailment Service Prvider f the acceptance int the prgram. PJM will ntify the apprpriate LSE and EDC f the Demand Resurce s acceptance. Curtailment Service Prviders shall maintain the accuracy f the registratin infrmatin prvided t PJM fr each Demand Resurce Prcess fr Determining the Apprpriate CBL (standard r alternative) PJM, the CSP, the EDC, and/r the LSE that prpses an alternative CBL calculatin shall prvide the alternative CBL calculatin and supprting analysis t the ther parties. PJM, the CSP, the EDC and the LSE shall have 30 days frm the day the alternative CBL prpsal is received by the ther parties t agree n a prpsed alternative CBL calculatin. If the parties agree n an alternative CBL calculatin, then the agreed upn CBL calculatin shall be effective frm the date f the registratin. If the parties d nt agree n an alternative CBL calculatin within 30 days, then PJM shall determine the CBL calculatin within 20 days f the expiratin f the prir 30 day perid. The CBL established by PJM shall be binding n the parties unless agreement n an alternative CBL is reached befre the end f the 20 day perid. The prcess fr determining the apprpriate CBL shall nt delay the registratin, prvided that the alternative CBL established shall be used fr all applicable energy settlements. PJM shall peridically publish herein alternative CBL calculatins established thrugh this prcess Ecnmic Energy Market Participatin Qualified Curtailment Service Prviders may ffer the lad reductins f Demand Resurces int the Day-ahead and Real-time Energy Market pursuant t the PJM Manuals, emkt User Guide, and the fllwing rules and requirements Day-ahead Operatins Demand Resurces, except Demand Resurces served under LMP-based cntracts that prvide fr payment fr the physical delivery f energy accrding t the hurly value f the real-time LMP as calculated by PJM, have the ptin t participate in the Day-ahead Market. Participants in Ecnmic Lad Respnse Prgram may submit a bid t reduce the lad they draw frm the PJM system in advance f real-time peratins. In the Day-ahead Market, the participant may submit a Lad Respnse Bid n behalf f a Demand Resurce ("Lad") fr a specific KW curtailment (in minimum increments f.1 MW r 100 KW). Participants that submit Lad Respnse bids in the Day-ahead Market may establish an incremental ffer curve. Demand Resurces that are served under LMP-based cntracts that prvide fr payment fr the physical delivery f energy accrding t the hurly value f the real- PJM

114 Sectin 10: Overview f the Demand Resurce Participatin time LMP as calculated by PJM, d nt have the ptin t participate in the Dayahead Market. Each Market Participant's registratin shall specify the transmissin znes r aggregates fr which that Participant is eligible t submit lad respnse bids. Lad Respnse Bids are assumed t exclude lsses (transmissin zne lsses and share f 500 kv lsses). The Lad Respnse Bid culd als include fr each Demand Resurce: Shut dwn csts, fr each perid Minimum dwn times fr which the lad reductin must be cmmitted Shutdwn csts and minimum dwn times are ptinal, and will default t zer (0) if nt submitted. Shutdwn cst will be expressed in dllars, and represents the fixed cst assciated with cmmitting a lad respnse resurce. Shutdwn csts will be changeable nly every six mnths, crrespnding t the sixmnth perids during which price-based start-up csts may be changed fr generatrs. The six mnth perids fr shutdwn csts are defined as fllws: Perid 1 is defined as April 1 September 30 and Perid 2 is defined as Octber 1 - March 30. Minimum dwn time will be expressed as a number f hurs, and represents the minimum number f cntiguus hurs fr which a lad respnse bid must be cmmitted in the Day-ahead Market. If a Prgram Participant submits n day-ahead bid infrmatin, then a zer KW quantity is assumed. The list f transmissin znes and aggregates fr which Lad Respnse Bids are accepted is defined by PJM. All day-ahead Lad Respnse Bids will be submitted t the emkt Web site by nn each day. The Day-ahead Market clses at 1600 each day, and cleared Lad Respnse Bids will be psted t emkt Real-time Operatins Demand Resurces including Demand Resurces served under LMP-based cntracts that prvide fr payment fr the physical delivery f energy accrding t the hurly value f the real-time LMP as calculated by PJM, have the ptin t participate in the Real-time Market. Curtailment Services Prviders, representing Demand Resurces participating as Ecnmic Lad Respnse resurces, may chse t cmmit t a reductin f the lad they draw frm the PJM system during times f high prices. These Curtailment Service Prviders are respnsible fr determining the cnditins under which lad reductins will actually take place and implementing the reductins shuld thse cnditins arise. PJM

115 Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Demand Resurces served under LMP-based cntracts that prvide fr payment fr the physical delivery f energy accrding t the hurly value f the real-time LMP as calculated by PJM, have the ptin t participate in the Real-time Market under the fllwing circumstances. The Curtailment Service Prvider shall prvide PJM with a strike price fr the Demand Resurce s znal LMP at which the Demand Resurce will reduce lad, as well as any shutdwn csts and pprtunity csts and csts assciated with the minimum number f cntiguus hurs fr which the lad reductin must be cmmitted. In cases where the znal real-time LMP reaches the strike price and the lad respnse is dispatched by PJM, PJM shall pay the CSP the difference between the actual savings achieved based n znal LMP and the ttal value f the lad respnse bid, if savings achieved by the lad reductin are less than the ttal value f the lad respnse bid. Fr purpses f this prvisin, the lad respnse bid will be the sum f the strike price times the MW f reductin achieved during each hur f the time perid the reductin was dispatched by PJM r minimum dwn-time whichever is greater, plus submitted shutdwn csts. Each Curtailment Service Prvider may submit an incremental ffer curve, r selfschedule in the Real-time energy market. If a Lad Respnse Bid fr a Demand Resurce is nt accepted in the Day-ahead Market and the CSP indicates that it wishes the Demand Resurce t be dispatchable in real time, PJM will use the incremental ffer curve and peratinal infrmatin t dispatch the Demand Resurce in real time. PJM shall nt dispatch a Demand Resurce that has already self scheduled. In the event that a Demand Resurce that has been self scheduled is als dispatched by PJM then settlement will be based n the Ntificatin f self-schedule. Curtailment Service Prviders shall prvide PJM with Ntificatin n less than 5 minutes prir t beginning a lad reductin event and n mre than 7 days prir t an event. CSPs may begin a Demand Respnse intra-hur prvided that Ntificatin is given. A Ntificatin may be withdrawn r adjusted dwnward during the relevant event hur, but nt after the event hur. The Ntificatin shall include the start and stp times f the event and the amunt f the demand reductin. PJM will prvide the Ntificatin windw(s) t the LSE as part f the settlement apprval prcess. In the event that the Lad Resurce fails t reduce lad and the CSP des nt submit a settlement, n payment r debit will be assessed by PJM. Ntificatin must be given when the CSP will submit a settlement fr an energy payment when the lad reductin cmplies with a synchrnized reserve event r a regulatin assignment. Demand Resurces will nt be eligible t set real-time price n the PJM system unless metered directly by PJM. The event perid fr self-scheduled Demand Resurces shall be defined as all hurs in the day fr which the CSP has prvided a Ntificatin. If Ntificatin and settlement hurs d nt match, then a review f the CSP s settlements fr up t the 12 prir mnths by PJM t determine free-ridership will be triggered. PJM

116 Sectin 10: Overview f the Demand Resurce Participatin 10.4 Demand Resurce Metering and Settlement Data Requirements The settlements submitted t PJM by Curtailment Service Prviders must cnfrm t the fllwing requirements fr data, including metered data, and Custmer Baseline Lad (CBL) calculatins Metered Data Fr lad reductin that is nt metered directly by PJM, Curtailment Service Prviders are respnsible fr frwarding the apprpriate meter data (as defined in this Manual) t PJM within 60 days f the reductin. Participants submitting a settlement fr an energy payment when lad reductin cmplies with a synchrnized reserve event r regulatin assignment must use data prvided by the lad meter. This data shall be frwarded thrugh elad Respnse. If the meter data files are nt received within 60 days, n payment fr participatin is prvided. Meter data must be prvided fr the hur prir t the reductin, as well as every hur during the reductin with the fllwing exceptin. When n-site generatin is used slely t enable the Participant t prvide demand reductins then the CSP may prvide qualified meter data frm the n-site generatin fr each hur f the event instead f actual lad metered data. Prvisin f hurly meter data frm the n-site generatin will be deemed a certificatin by the CSP that the n-site generatin was nt used fr any purpse ther than t supprt the lad reductin during the event day. If the On-Site Generatr is used n a regular basis fr nrmal peratins then the CSP may prvide qualified meter data frm the On-Site Generatr fr each hur f the event prvided the amunt f generatin run t prvide Ecnmic Lad Respnse can be quantified in a manner that is acceptable t PJM. Fr example, if a 5 MW On-Site Generatr that nrmally prvides 3 MW bsts its utput t 5 MW in respnse t LMPs the CSP will be eligible t receive a demand respnse energy settlement fr the additinal 2 MW f utput. Meter data will be frwarded t the EDC and LSE upn receipt, and these parties will then have ten (10) business days t prvide feedback t PJM. Objectin by the EDC r the LSE t the CBL, the Meter Data, r the retail rate shall be clearly set frth in the Cmments related t the Settlement Data. The CSP shall crrect and re-submit the Settlement Data within 2 business days. The bjecting EDC and/r LSE shall have 5 business days t review the re-submitted Settlement Data r PJM will assume acceptance. All lad reductin data are subject t PJM Market Mnitring Unit audit Custmer Baseline Lad (CBL) Fr thse CSPs that wish t measure lad reductins by cmparing metered lad against an estimate f what metered lad wuld have been absent the reductin, a PJM

117 Sectin 10: Overview f the Demand Resurce Participatin Custmer Baseline Lad (CBL) shall be calculated fr each Demand Resurce ( Lad ). A Custmer Baseline Lad cannt be calculated fr the Demand Resurces participating as Emergency Lad Respnse resurces. A Custmer Baseline Lad is calculated fr three timeframes: an Average Day CBL fr Weekdays, the Average Day CBL fr Saturdays, and the Average Day CBL fr Sundays/Hlidays. The standard CBL fr all three timeframes is set frth in sectin 3.3A.2 (Custmer Baseline Lad) f the PJM Tariff. At the time it enters the Lad Respnse Prgram, the Demand Resurce r its representative (CSP), shall specify whether it desires t apply a Weather Sensitivity Adjustment (WSA) fr the summer perid (May-Octber, inclusive) r the winter perid (Nvember-April) r bth. The electin t apply the WSA may be changed nly annually. The WSA shall increase r decrease the CBL. The WSA shall be calculated fr interval-metered Demand Resurces using a simplified methdlgy, including a regressin analysis and analysis methd, as defined in the Prgram Dcumentatin. This simplified methdlgy nly will be applicable fr reductins in real-time Ecnmic Lad Respnse during the summer mnths when the hurly temperature at the nearest majr airprt equals r exceeds 85 degrees during each hur f the lad reductin event and the WSA wuld make mre than a five percent difference in the CBL that is calculated. The WSA, expressed in percentage terms, shall be applied t each hur f the CBL during the event perid in rder t establish a weather-adjusted CBL. The CSP may chse t apply t the Symmetric Additive Adjustment instead f the regressin analysis r the simplified methdlgy described abve. The electin t apply the Symmetric Additive Adjustment shall be made at the time the Demand Resurce is registered and annually thereafter. The Symmetric Additive Adjustment is defined in sectin 3.3A.3(a) (Weather-Sensitive and Symmetric Additive Adjustment) f the PJM Tariff. Fr Demand Resurces withut interval data frm the previus summer that select the regressin analysis, the WSA shall initially be set at 100%. After ne mnth f actual prgram respnse, a regressin analysis shall be perfrmed and the WSA shall be adjusted. In n event shall applicatin f the WSA prduce a weather-adjusted CBL that exceeds the Demand Resurce s histrical, seasnal, n-peak nn-cincident peak lad. Case-by-case suggestins fr alternative WSA methds r adjustments t the Demand Resurce s histrical, seasnal, n-peak nn-cincident peak lad may be apprved by PJM if negtiated in gd faith and agreed t by all apprpriate parties. Curtailment Service Prviders are respnsible fr frwarding the apprpriate CBL data (t PJM within 60 days f the reductin. If the CBL data files are nt received within 60 days, n payment fr participatin is prvided. PJM

118 Sectin 10: Overview f the Demand Resurce Participatin CBL data must be prvided fr each cntiguus hur during which lad reductin was accmplished. PJM will frward Custmer Baseline (CBL) and Weather-Sensitive Adjustment (WSA) calculatins t the apprpriate EDC and LSE fr ptinal review. EDC and LSE will prvide feedback t PJM within ten (10) business days f receipt f data. Objectin by the EDC r the LSE t the CBL, the Meter Data, r the retail rate shall be clearly set frth in the Cmments related t the Settlement Data. The Curtailment Service Prvider shall crrect and re-submit the Settlement Data within 2 business days. The bjecting EDC and/r LSE shall have 5 business days t review the resubmitted Settlement Data r PJM will assume acceptance. This prcedure des nt affect the requirement fr the CSP t submit the settlement t PJM within 60 days f the lad reductin event. The Demand Resurce shall infrm PJM directly r infrm its CSP, wh shall infrm PJM, f any significant change t the Demand Resurce s peratins that increases r decreases the Demand Resurce s CBL. A significant incremental change is defined as any peratinal r physical change t the Demand Resurce s facilities that will adjust mre than half the hurs in the Demand Resurce s CBL by at least 20% fr mre than twenty cnsecutive days. PJM may require and apprve such adjustments t the CBL as are necessary t reflect the significant incremental change. All CBL data are subject t PJM Market Mnitring Unit audit Settlements Data Requirements Data required fr emergency lad respnse settlements: Real-time LMP values by Zne r aggregate (including ndal) (PNODE) Actual Metered Reductin (Hurly MW) by Market Participant and by Zne r aggregate (including ndal) (PNODE) Actual Lad (Hurly MW) by Market Participant and by Zne r aggregate (including ndal) (PNODE) Market Participant acting as CSP (ParticipantName) Data required fr day-ahead ecnmic lad respnse settlements : Day-ahead LMP values by Zne r aggregate (including ndal) (PNODE) Day-ahead lad respnse scheduled MW quantities by Market Participant and by Zne r aggregate (including ndal) (PNODE) Real-time LMP values by Zne r aggregate (including ndal) (PNODE) Actual Metered Reductin (Hurly MW) by Market Participant and by Zne (PNODE) PJM

119 Manual 11: Energy & Ancillary Services Market Operatins Sectin 10: Overview f the Demand Resurce Participatin Actual Lad (Hurly MW) by Market Participant and by Zne (PNODE) Lad-serving entity (LSEOrgId) Market Participant acting as CSP (ParticipantName) Lss Factr Retail Rate (G & T) Data required fr real-time ecnmic lad respnse settlements: Real-time LMP values by Zne r aggregate (including ndal) (PNODE) Actual Metered Reductin (Hurly MW) by Market Participant and by Zne r aggregate (including ndal) (PNODE) Actual Lad (Hurly MW) by Market Participant and by Zne r aggregate (including ndal) (PNODE) CBL (Hurly MW) Lad-serving entity (LSEOrgId) Market Participant acting as CSP (ParticipantName) Lss Factr Retail Rate (G & T) Real-time Operating Reserve Charges (t be applied when the bid f the Demand Resurce cleared in the Day-ahead Energy Market and the Demand Resurce ver r under perfrmed in the real-time) There are tw Operating Reserve calculatins, which require the fllwing infrmatin: Day-ahead Operating Reserves ShutDwn Csts submitted biannually Balancing Operating Reserves ShutDwn Csts submitted biannually 10.5 Aggregatin fr Ecnmic Lad Respnse The purpse fr aggregatin is t allw the participatin f end-use custmers in the energy market that can prvide less than 100 kw f demand respnse when they currently have n alternative pprtunity t participate n an individual basis r can prvide less than 100 kw f demand respnse in the day-ahead scheduling reserve (DASR), synchrnized reserve (SR) r regulatin (REG) markets when they currently have n alternative pprtunity t participate n an individual basis. An aggregatin shall meet the fllwing requirements: PJM

120 Sectin 10: Overview f the Demand Resurce Participatin If the aggregatin will nly prvide energy t the market then nly 1 end use custmer within the aggregatin shall have the ability t reduce mre than 99kw f lad unless the CSP, LSE and PJM apprve. If the aggregatin will prvide an ancillary service t the market then nly 1 end use custmer within the aggregatin shall have the ability t reduce mre than 99kw f lad unless the CSP, LSE and PJM apprve. All end-use custmers in an aggregatin shall be served by the same electric distributin cmpany r Lad Serving Entity (LSE) where the EDC is the LSE fr all end-use custmers in the aggregatin. If the aggregatin will prvide synchrnized reserves, all custmers in the aggregatin must als be part f the same synchrnized reserve sub-zne. All end-use custmers in an aggregatin that settle at Transmissin Zne, existing lad Aggregate, r nde prices shall be lcated in the same Transmissin Zne, existing lad Aggregate, r at the same nde. Each end-use custmer site must meet the requirements fr market participatin by a Demand Resurce except fr the 100 kw minimum lad reductin requirement fr energy and ancillary services. An end use custmer s participatin in the energy and ancillary service markets shall be administered under ne ecnmic registratin Calculatins fr the weighted average retail rate and line lss factr When all end-use custmers in a Registratin are nt subject t the same retail rate, the rate fr the Registratin shall be the registratin lad reductin weighted average f the retail rates fr end-use custmers in an aggregatin. When all end-use custmers in a Registratin are nt subject t the same line lss factr, the factr fr the Registratin shall be the registratin lad reductin weighted average f the factrs fr end-use custmers in an aggregatin. PJM shall calculate the Rati Share fr each end-use custmer as the percentage share f the summatin f the individual anticipated lad reductin capabilities (Ttal kw). PJM shall calculate the Weighted Average G&T (WA G&T) by multiplying the Rati Share times the G&T fr each end-use custmer and ttalizing the results. The WA G&T shall represent the G&T f the Registratin. PJM shall calculate the Weighted Average line lss factr (WA LF) by multiplying the Rati Share times the lss factr (LF) fr each end-use custmer and ttalizing the results. The WA LF shall represent the lss factr f the Registratin. PJM shall prvide the calculatin f all lad weighted values and their supprting data t the LSE and CSP at the time f registratin. An example calculatin wuld be: PJM

121 Sectin 10: Overview f the Demand Resurce Participatin Settlement fr Aggregatin All end-use custmers in the Registratin are cnsidered t have individually participated in each curtailment event as scheduled by the CSP r dispatched by PJM fr the Registratin. All supprting details as utlined belw will be available t the LSE after the settlement is submitted by the CSP. Registratin Custmer Baseline (CBL) based n the sum f the each end use custmer s meter data. Meter data fr each end use custmer in the aggregatin. Metered Lad - Each individual end-use custmer in the aggregatin will have its wn metered lad and the summatin f the individual metered lads will represent the Registratin metered lad. Weighted Average G&T - The lad reductin weighted average G&T rate shall be the value calculated fr registratin. Weighted Average Lss Factr - The lad reductin weighted average lss factr shall be the value calculated fr registratin Interval Meter Equipment and Lad Data Requirements (Sectin becmes effective n 10/1/09) A CSP, LSE, EDC r agent designated by the CSP may fulfill the interval metering equipment and lad data respnsibilities that are required by PJM f the CSP fr ecnmic and emergency demand respnse resurces including ancillary services. Interval metering equipment and lad data used fr retail electricity service shall be deemed t meet PJM requirements fr energy settlement and capacity cmpliance. The fllwing dcumentatin shall be prvided by the CSP t PJM when nn-retail electric service metering equipment and lad data will be utilized fr settlements r cmpliance. The CSP shall verify that all dcumentatin is accurate and maintain cmpliance t PJM metering equipment and lad data requirements. The date the metering equipment was installed, tested and ready t recrd, stre and cmmunicate interval lad data fr DSR activity PJM